Dollar declined to a three-year low against Chinese yuan
The U.S. dollar remained under pressure on Monday, declining to a three-year low against the Chinese yuan. Notably, economic activity data revealed that China’s recovery had slowed but remained on a strong footing.
The Chinese economy has largely recovered from the coronavirus pandemic. Its factory activity growth slowed slightly in May as raw materials prices rose at their fastest pace in over a decade. The offshore yuan traded at 6.3553 per dollar, its highest since May 2018, even if analysts pointed that Chinese authorities appeared to be keen to want to curb its rise.
On Friday, U.S. price data pushed the dollar higher against a basket of currencies. Still, the dollar declined on Monday as investors weighed the possibility of the impact of soaring price pressures and a dovish Fed on U.S. assets. U.S. consumer prices surged in April. The core PCE price index jumped 3.1%, the largest annual gain since July 1992, due to a rebound from the COVID-19 pandemic and various supply disruptions.
According to Ulrich Leuchtmann, Commerzbank’s head of FX and commodity research, the market considers the current inflation levels to be transitional. In contrast, next year, U.S. inflation will remain at 2.5%.
The dollar traded close to a two-month peak against the Japanese yen
The U.S. dollar is on track for its second consecutive month of loss versus a basket of currencies. It declined by 0.1% at traded at 90.027 at 0820 GMT. The greenback traded close to a two-month peak against the Japanese yen after a key measure of U.S. inflation showed stronger price gains than anticipated, keeping alive expectations of an eventual tapering in the Federal Reserve’s asset-buying.
The American currency boosted by 0.2% to 109.70 yen and stood close to its Friday peak of 110.20, its highest since early April. Meanwhile, the euro was flat at $1.216, off Friday’s low of $1.2133. The British sterling traded at $1.4176.
In cryptocurrency markets, the world’s dominant cryptocurrency, Bitcoin, rose by 1.1% and traded at $36,069. Meanwhile, the second-largest cryptocurrency, Ether, surged 3.4% to $2,468.
- Trading Instrument
Get the latest economy news, trading news, and Forex news on Finance Brokerage. Check out our comprehensive trading education and list of best Forex brokers list here. If you are interested in following the latest news on the topic, please follow Finance Brokerage on Google News.