The Greenback Rolls Down the Forex Hill
After week-long lows, the greenback steps up once again. The US dollar has been on the low lately for bolstering expectations of economic recovery, losing its appeal.
Apparently, an improvement in the US labor market didn’t sit well with investors. Both the Australian and New Zealand dollars rose in the FX market to their highest since January.
The boost from down under was brought by lower figures for Chinese exports than expected.
However, the US dollar still traded higher than its alternative, the Japanese yen for two months in a row. Long-term Treasury yields benefit the dollar a few days before the US Federal Reserve will meet.
Forex traders are now focusing on which country expects to recover the fastest post-coronavirus. For the next two days, the greenback is expected to improve. Which could set course after the meeting.
Lockdowns greatly hurt the dollar the past few months after its initial surge in March as a safe haven currency. They’re now turning to reopening economies and into risk-sensitive forex trading.
Analysts and strategists claim that the greenback using its appeal would mean good news for commodities and alternate currencies. Now that the safest currency isn’t the safest anymore, other assets find it easier to surge past its value.
Nonetheless, its lowering value is still higher than yen as the focus remains on yields.
The Greenback Against Asian Markets
The yen continued its descent against the dollar after it announced staggering economic data on Monday. Its fate depends on Wednesday afternoon.
Until then, investors may have to avoid making big trades for the greenback. Analysts expect the Fed Chair Jerome Powell to announce a rise in 10-year Treasury yields and a steep yield curve.
The Chinese yuan, currency of the world’s second-largest economy, dropped after exports in May fell lower than anticipated. Markets were expecting a higher figure than the 3.5% gain in April, but May’s shipment figure fell by 3.3% year-over-year.
Plus, Chinese imports were higher in May than expected, which worsened the currency’s appeal. It was the country’s sharpest decline since the beginning of 2016.
After the surprising export figure reported last weekend, investors are pessimistic over its future figures. Due to earlier controversy, Chinese exporters were stuck with unsold stock and cancelled orders from other countries.
All that said, the US-China conflicts are set to worsen the rival currencies. Although it’s important to note that amid national chaos, President Donald Trump will have to settle with a deal.
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