In Asia, the dollar was under pressure last week Monday and was headed for its first monthly price fall in five months as investors have scaled back bets that rising U.S. rates will spark more gains and as concerns about a global recession have receded a little.
Next week is full of data that could give clues on the outlook for global development, the U.S. dollar and interest rate with Chinese Purchasing Managers’ Index figures, U.S. jobs abundances and growth data in resource bellwether Australia.
Trade was probably to be light throughout Monday as US stock and bond markets close due to the Memorial Day public holiday.
Data on Friday indicated that US consumer spending boosted more than anticipated in April as households increased purchases of goods and services, and the increase in inflation stalled.
Early in the Asia session, the dollar was a fraction weaker than the euro at $1.0728, just above a five-week low, having dropped about 1.5% on the common currency last week, even though it stays up about 6% on the year.
Analysts disclosed the encouraging data, coupled with bets on a more cautious tightening path by the Fed, was undermining the dollar.
European shares surged to more than three-week highs on Monday as lessening COVID-19 constraints and new incentives in China helped maintain last week’s positiveness.
“How the US consumer plays out from here and from a global perspective how the Chinese economy performs will be crucial determinants for broader investor risk appetite,” disclosed by currency analysts at MUFG in a note.
The dollar index, which hit a two-decade high of 105.010 previously in May, was steady at 101.660 on Monday. Sterling had the highest gains at $1.2628 last week.
China’s yuan also held steady at 6.7210 per dollar in offshore exchange, buoyed by growth out of virus lockdowns.
Shanghai announced on Sunday that “unreasonable” curbs on businesses will be discarded from June 1, while Beijing reopened fractions of its public transport, also some malls.
Most analysts are wary of calling an outright end to the recent dollar strength
But positive U.S. consumer data and the lessening lockdowns in China are boosting kindle hopes about global development, which tends to benefit exporters’ currencies at the dollar’s expense.
“The Fed has stopped short of validating calls for even more tightening, leading to a plateau in forwarding expectations,” NatWest Markets’ global head of desk strategy, John Briggs said.
Cryptocurrencies remain on the backward slide and bitcoin has struggled to regain losses made during a wide sell-off of risk assets at the beginning of the month. It was last purchased for $29,333.
