Image: Reuters Berita 24 English - Due to concerns about slowing global economy , investors sought safety on Monday, which put pressure on t...
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| Image: Reuters |
Berita 24 English - Due to concerns about slowing global economy, investors sought safety on Monday, which put pressure on the euro and kept trade-sensitive currencies anchored near multi-year lows.
The European Central Bank should raise interest rates this month as evidenced by data released on Friday that showed euro zone inflation soaring to yet another record.
The common currency was stable on Monday at $1.0435, although it is only just above May's five-year low of $1.0349, underscoring the market's preference for dollars as the outlook is clouded by doom.
Early in the Asia session, the Australian dollar was down 0.3 percent to $0.6796 after sliding as low as $0.6764 on Friday. The New Zealand dollar was also close to its two-year lows. To $0.6197, the kiwi declined by 0.1 percent. [AUD/]
Before the American holiday of Independence Day, trade is probably going to slow down.
When the global economy is struggling, safety flows often favour the dollar, especially at the expense of trade and export-driven currencies. Despite growth concerns dampening expectations for a rate hike in the United States, this has kept the currency strong.
The U.S. dollar index was at 105.100, just shy of the two-decade high set last month of 105.790. The closely followed GDP Now prediction from the Atlanta Federal Reserve has dropped to an annualised -2.1 percent for the second quarter, indicating the US was already technically in a recession.
Given that markets are currently hyper-focused on the risk of a sharp slowdown in the global economy, Carol Kong, a currency strategist at the Commonwealth Bank of Australia in Sydney, predicted that the Australian dollar and other commodity currencies, as well as the euro and sterling, would likely decline even further into the coming week.
Friday saw the pound drop to a two-week low of $1.1976 and last traded at $1.2095. [GBP/]
This week's events include a meeting of the Australian central bank on Tuesday, the release of the minutes from the latest Federal Reserve meeting on Wednesday, and the release of U.S. employment data on Friday.
Markets have already factored in a 40 basis point (bp) increase in Australia, so even if it happens, the Aussie may not benefit significantly.
Given that the committee decided to raise rates by an enormous 75 basis points, the minutes of the Fed's June policy meeting are nearly certain to seem aggressive.
The market is estimating a roughly 85% chance of this month's rate hike of 75 basis points and rates at 3.25–3.5% by year's end, before cuts in 2023.
The dollar maintained Friday gains that took it to its highest levels in years against the Singapore dollar, Indonesian rupiah, and Thai baht. [EMRG/FRX]
The onshore session started with the Chinese yuan stable at 6.7021 to the dollar. [CNY/]
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Exchange rates at 01:35 GMT
Description Change in YTD Pct for RIC's Last U.S. Close Pct Low Bid High Bid
the previous modification
Session
Euro/Dollar
$1.0433 $1.0427 increased by 0.04 percent and fell by 8.24 percent. +1.0444 +1.0418
Dollar/Yen
134.8100 135.2700 -0.34 percent +0.00 percent +135.2950 +134.8150
Euro/Yen
141.17 percent +7.91 percent +141.1700 +140.6300 140.63 140.99 -0.26%
Dollar/Swiss
0.9584 0.9596 0.05 percent 5.15 percent 0.9596 + 0.9596 + 0.9586 + 0.9583
Sterling/Dollar
1.2093 1.2095 +0.00% -10.57% +1.2119 +1.2095
Dollar/Canadian
1.2900 2.05 percent and 1.2883 +0.16 percent +1.2902 +1.2876
Aussie/Dollar
In percentage terms, the values are as follows: 0.6796 0.6817 -0.31% -6.51% +0.6828 +0.6796
NZ
Dollar/Dollar: 0.6197 0.6205 -0.13 percent -9.46 percent +0.6217 +0.6197
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