Home NewsStock Market News The dollar has a strong momentum and the largest increase in 2 years, the RMB hit a new low in nearly 2 years | Anue Juheng

The dollar has a strong momentum and the largest increase in 2 years, the RMB hit a new low in nearly 2 years | Anue Juheng

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The dollar has a strong momentum and the largest increase in 2 years, the RMB hit a new low in nearly 2 years | Anue Juheng


The dollar index hit a five-week high on Friday (19th) and posted its biggest weekly gain in more than two years as investors adjusted expectations for the Federal Reserve to continue raising interest rates. As the dollar strengthened, the yuan depreciated to a near 2-year low, and the continued divergence of U.S. and Chinese monetary policies prompted funds to leave China.

The ICE U.S. Dollar Index (DXY), which tracks the greenback against six major currencies, was up 0.58% at 108.10 in late New York trade. DXY rose 2.34% for the week, its biggest weekly gain since April 2020.

Fed officials agreed on Thursday that the central bank must continue to raise borrowing costs to curb inflation at multi-decade highs, though they remained divided on the pace and magnitude of rate hikes.

Richmond Fed President Thomas Barkin said on Friday that the central bank is committed to returning inflation to its 2 percent target even if it has to risk sending the U.S. into recession.

When it comes to his views on the magnitude of the rate hike, Barkin believes that there is still a lot of time before the September meeting, and the rate hike will depend on economic data and whether inflation pressures start to ease. Barkin is not a voting member of the Federal Open Market Committee (FOMC) this year.

“For the dollar to weaken significantly, the Fed would have to focus more on growth than inflation, but it’s not there yet,” said Bank of America analyst Michalis Rousakis.

The Fed is seen as having more room to raise interest rates than other large economies. The euro fell 0.53% to $1.0034 on Friday, its lowest level since July 15.

Rousakis expects the European Central Bank (ECB) to stop raising interest rates next year, given concerns about economic growth and interest rate differentials. In addition, the euro faces risks from worsening terms of trade and a slowdown in China’s economy.

News of the shutdown of Nord Stream 1 for maintenance also weighed on the euro. Gazprom has announced that Nord Stream 1 will be out of service for maintenance from August 31 to September 2.

Both the onshore and offshore yuan fell to their lowest levels since September 2020, and traders expected further weakness. At the time of writing, the onshore renminbi was down 0.46% against the dollar to 6.8169 yuan, and the offshore renminbi was down 0.31% against the dollar to 6.8209 yuan.

The yuan’s weakness was initially triggered by an unexpected rate cut by the People’s Bank of China this week, and worries about China’s economy weighed on the yuan after Goldman Sachs and Nomura Holdings downgraded their growth forecasts.

Alvin Tan, head of Asian foreign exchange strategy at RBC Capital Markets, said the yuan still has room to retreat amid a weakening economy. He said the onshore yuan/dollar exchange rate will reach 7 in the first quarter of next year, and the PBOC is unlikely to oppose further depreciation.

Analysts at Standard Chartered Bank and Mizuho Bank also expect a weakening of the renminbi due to the apparent divergence of monetary policy stances between the United States and China.

In cryptocurrencies, Bitcoin fell below the 22,000 mark to a three-week low after a sudden sell-off in early European trade, and was down more than 9% at $21,267.3 at press time. Ether also fell nearly 10 percent to $1,686.9.

Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, said weakness has permeated the cryptocurrency space after speculators retreated from riskier assets.

As of Saturday (20th) Taiwan time about 6:00 Price:

The dollar index was at 108.1371. +0.5941% The euro against the US dollar (EUR/USD) was quoted at $1.0034 per euro. -0.5254% The British pound against the US dollar (GBP/USD) was quoted at $1.1827 per pound. -0.8551% The Australian dollar against the US dollar (AUD/USD) was quoted at 1 Australian dollar at 0.6872. -0.5787% The US dollar against the Canadian dollar (USD/CAD) was quoted at 1.2992 Canadian dollars per US dollar. +0.3708% The U.S. dollar was quoted at 136.93 yen against the Japanese yen (USD/JPY). +0.7876%

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