Dollar up, slight signs of economic recovery limits gains
The dollar rose in Asia on Tuesday morning. The safe-haven asset recovered some of its overnight losses, while the yen rose as U.S. stock futures dipped on Snapchat’s profit warning.The U.S. Dollar Index, which measures the greenback’s value against a basket of other currencies, rose 0.15 per cent to 102.06.
The USD/JPY pair fell 0.13 per cent to 127.70, as the Japanese manufacturing purchasing managers’ index fell to 53.2 in May 2022. Japan also published its services PMI for the month.
The AUD/USD pair fell 0.32 per cent to 0.7084, while the NZD/USD pair fell 0.46 per cent to 0.6437. In the first quarter of 2022, New Zealand’s core retail sales increased by 0% quarter on quarter, while retail sales decreased by 0.5 per cent quarter on quarter.
The USD/CNY pair rose 0.12% to 6.6585, while the GBP/USD pair fell 0.20 per cent to 1.2563.
The U.S. currency recovered its losses following Monday’s 0.85 per cent drop, which put it further away from the nearly two-decade high above 105, reached in the middle of the month. However, the dollar fell versus the Japanese yen.
The euro fell 0.21 per cent to $1.0672, reversing Monday’s 1.17 per cent gain after European Central Bank President Christine Lagarde said policymakers were likely to bring the eurozone deposit rate out of the negative territory by the end of September 2022.
The dollar has fallen alongside U.S. Treasury yields from multi-year highs, and the market has already priced in rapid Fed easing.
Meanwhile, the Chinese metropolis of Shanghai is anticipated to lift its lockdown shortly, and U.S. President Joe Biden’s comments earlier this week about a possible softening of the trade conflict with China lifted risk sentiment at the expense of the dollar.
Investors are now looking forward to additional global manufacturing PMIs, which will be released during the day. The U.S. dollar is nearing a peak, while commodity currencies such as the Australian dollar are nearing a bottom, but it will be a challenging ride.
