Dollar bid on global growth fears after weak Chinese data
* Graphic: World FX rates Link
By Karen Brettell
NEW YORK, Aug 15 (Reuters) - The safe-haven dollar bounced on Monday while commodity sensitive currencies including the Australian dollar tumbled after a new batch of disappointing Chinese data bolstered global recession worries.
Chinese industrial output, retail sales and fixed-asset investment all fell short of analyst estimates in data published on Monday, as a nascent recovery from draconian COVID-19 lockdowns faltered.
"Bad data from China also weighs on recession worries for the rest of the world," said Ipek Ozkardeskaya, market strategist at Swissquote. That pushed down the euro against the greenback, she added.
The U.S. dollar index =USD gained 0.45% to 106.15. The euro EUR=EBS eased 0.55% against the dollar to $1.0200.
The Australian dollar AUD=D3 , which is sensitive to commodity prices and viewed as a proxy for global growth, dropped 1.37% to $0.7022.
The offshore yuan CNH= hit 6.7904, the weakest since Aug. 2, after China's central bank cut key lending rates in a surprise move to revive demand.
The dollar index has fallen from a 20-year high of 109.29 on July 14 on hopes that the Federal Reserve will slow its aggressive pace of rate increases and that the worst of inflation increases may be behind us.
Concerns that the Fed tightening will send the economy into recession has also helped to send U.S. Treasury yields lower.
However, Fed officials have maintained a hawkish tone and stressed that it is too soon to declare victory on inflation.
“The Fed is telling us they want to tighten financial conditions and the market has eased them, so the Fed is going to have to drive home its point with a larger rate hike,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York, adding that he expects the U.S. central bank to raise rates by 75 basis points at its September meeting.
Data this week including industrial production on Tuesday and retail sales on Wednesday could also “help ease fears that the U.S. contracted again,” Chandler said, which would boost the greenback.
A New York state manufacturing survey on Monday showed a sharp decline in activity in August.
Currency bid prices at 9:50AM (1350 GMT) Description
U.S. Close Pct Change
+106.3400 +105.5400 Euro/Dollar
+133.5850 +132.5550 Euro/Yen
+137.0700 +135.2900 Dollar/Swiss
+0.9409 Sterling/Dollar GBP=D3
+$1.2051 Dollar/Canadian CAD=D3
Additional reporting by Joice Alves in London; Editing by Kirsten Donovan
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.