China released weak economic data, deepening concerns about a global economic slowdown, the dollar index weakened on Monday (16th), consolidating near a 20-year high, and the offshore yuan fell slightly.
In late New York trade, the ICE Dollar Index (DXY), which tracks the greenback against six major currencies, was down 0.34% at 104.20.
China reported sharp declines in April retail sales and industrial output data on Monday, as the coronavirus lockdown forced consumers to stay at home and factory production was restricted, but Shanghai also began a phased easing of lockdowns on Monday, with the goal of reopening in June. From the 1st to the middle and late end of the month, a full return to normal life.
Monday’s trade focused on headline economic data, and the fundamentals didn’t look good from a risk-off perspective, which should support the dollar’s performance against most currencies, said Bipan Rai, head of North American FX strategy at CIBC Capital Markets.
However, Rai also said that the U.S. dollar is consolidating after its recent strength and is likely to usher in more range-bound trading, and it is reasonable to consolidate for a while before the next move higher.
Mazen Issa, senior currency strategist at TD Securities, said part of the dollar’s slowdown has to do with the bad news being digested, but it could also be that investors are watching U.S. retail sales and Fed Chairman Jerome Powell. Speaking publicly, he doesn’t think the dollar will weaken as a result.
The euro recovered from its lows and was up 0.21% at $1.0434 against the dollar.
As the euro approaches parity against the dollar, Bank of France governor Francois Villeroy de Galhau warned that a weak euro could add to imported inflation pressures in the euro zone, as it represents imports of dollar-denominated goods Prices will become more expensive.
HSBC strategists expect the euro to fall to parity against the dollar next year, saying a sharp slowdown in economic growth and rising inflation will present the European Central Bank with the toughest policy challenge of any G10 central bank.
USD/CNH edged up 0.05% to 6.7939 yuan. Gains in the offshore yuan subsided after it was reported last month’s retail sales and industrial added value fell far short of expectations.
The Australian dollar, which is more sensitive to China’s economy, fell about 0.9% at one point in the session, but reversed its decline in late trading and rose 0.49% to US$0.6972 against the US dollar.
Bitcoin briefly climbed back above $31,000 and was down 3.4% at $30,049.4 at press time, while ether was down 4.9% at $2,036.9.
As of Tuesday (17th) Taiwan time about 6:00 Price:
The dollar index was at 104.21. -0.2774% The euro against the US dollar (EUR/USD) was quoted at $1.0434 per euro. +0.2113% GBP/USD (GBP/USD) was quoted at $1.2320. +0.4812% The Australian dollar against the US dollar (AUD/USD) was quoted at 1 Australian dollar to 0.6970 US dollars. +0.4612% The US dollar against the Canadian dollar (USD/CAD) was quoted at 1.2849 Canadian dollars per US dollar. -0.4571% The U.S. dollar against the Japanese yen (USD/JPY) was at 129.06 yen per dollar. +0.0000%