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| Reuters. FILE PHOTO: U.S. Dollar banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo |
In Asia on Thursday, the US dollar stabilized after experiencing an increase in US yields. This happened as investors awaited European inflation data, following some unpleasant surprises in Germany, France, and Spain which caused the euro to strengthen this week.
On Wednesday, the US dollar lost 0.9% against the euro, marking its most significant decline in a month. However, it rebounded slightly on Thursday, being about 0.2% stronger against the euro. In Asia, the euro was trading at $1.0649 ahead of the inflation data release scheduled for 1000 GMT.
German inflation was higher than expected in February, which puts pressure on the European Central Bank to increase interest rates after similarly strong readings from France and Spain. As a result, the market is anticipating another uncomfortably high inflation reading.
According to OCBC Bank strategist Christopher Wong in Singapore, the expectation is that the rise in inflation will be slower, which is a contrast to the recent re-acceleration of France and Spain's Consumer Price Index (CPI). However, if there is an unexpected increase in inflation, it could give the euro a boost.
The U.S. dollar index increased by 0.2% to 104.58, with the help of the rising U.S. Treasury yields during Asia trade. Additionally, Federal Reserve official Neel Kashkari suggested that there could be a 50 basis point rate hike at the Fed's next meeting in March.
Meanwhile, the yen remained relatively stable at 136.40 to the dollar. The Australian and New Zealand dollars, along with the Chinese yuan, had slight fluctuations following significant gains on Wednesday, which were supported by strong Chinese manufacturing data.
For the Australian dollar to maintain its recovery, it needs to surpass its 200-day moving average at $0.6794. As of Thursday, it was 0.2% weaker, trading at $0.6746. Meanwhile, the New Zealand dollar, which saw a 1.2% increase on Wednesday, decreased by 0.4% on Thursday, trading at $0.6230.
After experiencing its most significant jump of 2023 on Wednesday, China's yuan settled back to 6.8928 to the dollar.
Investors are anticipating guidance on policy support for the post-COVID recovery during China's National People's Congress meeting, which begins on Sunday.
According to Joe Capurso, head of international economics at Commonwealth Bank of Australia, the positive surprise in China's February PMIs can lead to an increase in mining commodity prices and the currencies of countries that export them. He also believes that the Australian dollar can experience a significant increase in the weeks following China's Two Sessions meetings.
Capurso anticipates that the yuan and commodity currencies, such as the Australian and New Zealand dollars, could experience a substantial rise if the meeting sends a pro-growth signal, which is what he expects.
On the other hand, the remarks made by Bank of England Governor Andrew Bailey held back the sterling. Bailey's comment "nothing is decided" regarding future rate increases led traders to reduce their bets on higher rates. Consequently, sterling decreased by 0.2%, trading at $1.2005.
Despite the decrease in the value of the dollar, Bitcoin has not seen much progress, and it is currently trading at $23,493. The negative news regarding Silvergate, a cryptocurrency bank, has impacted the market sentiment, and the bank's stocks declined by 28% on Wednesday. The bank warned that it would delay its annual report and assess its operational ability.
Additionally, euro zone employment, central bank minutes, and U.S. jobless claims data will be released later in the day, alongside the European inflation data.
Currency bid prices at 0432 GMT
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar
$1.0647 $1.0670 -0.21% +0.00% +1.0672 +1.0645
Dollar/Yen
136.4000 136.2350 +0.00% +0.00% +136.4350 +136.0700
Euro/Yen
145.24 145.29 -0.03% +0.00% +145.3400 +145.1200
Dollar/Swiss
0.9422 0.9398 +0.26% +0.00% +0.9422 +0.9395
Sterling/Dollar
1.2003 1.2025 -0.17% +0.00% +1.2035 +1.2001
Dollar/Canadian
1.3612 1.3592 +0.14% +0.00% +1.3626 +1.3586
Aussie/Dollar
0.6742 0.6759 -0.25% +0.00% +0.6766 +0.6728
NZ
Dollar/Dollar 0.6227 0.6257 -0.44% +0.00% +0.6257 +0.6224
All spots
Tokyo spots
Europe spots
Volatilities
Tokyo Forex market info from BOJ
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