Dollar adrift as optimism over China reopening turns to caution

Dollar adrift as optimism over China reopening turns to caution
Dollar adrift as optimism over China reopening turns to caution
© Reuters. FILE PHOTO: U.S. Dollar banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration

By Rae Wee

SINGAPORE (Reuters) – The dollar pared some gains on Thursday after riding long-end U.S. Treasury yields higher overnight, though investors remained on edge going into the year end as initial optimism over China’s reopening fizzled.

Following China’s removal of its quarantine rule for inbound travellers beginning Jan. 8, countries such as the United States, Japan and India said they would require COVID tests for travellers from China.

The speed at which the country has scrapped COVID rules has overwhelmed its health system and sparked concerns about the spread of the virus.

The Japanese yen was last roughly 0.6% higher at 133.71 per dollar, languishing near a one-week low of 134.50 that was hit in the previous session.

Sterling rose 0.1% to $1.2030, but was similarly not far off its three-week trough of $1.1993 hit last week.

The euro was up 0.12% at $1.0623.

“Many countries adopting an additional layer of testing for travellers arriving from China reflect hobbled resumption of travel amid China’s outbreak,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank. “This might also fuel fears of new strains of COVID that could once again disrupt the global recovery.”

The uncertainty over the global economic outlook, along with mounting worries about a recession in the United States, saw the two-year Treasury yield, which typically moves in step with interest rate expectations, slip overnight. It last stood at 4.3678%.

Meanwhile, the yield on the benchmark U.S. 10-year Treasury last stood at 3.8637%, after rising to a more than one-month high of 3.8920% overnight. [US/]

Against a basket of currencies, the was firm at 104.33.

“Near term, there’s still the big question mark as to how soon can we get over this COVID resurgence,” said Moh Siong Sim, a currency strategist at Bank of Singapore. “But in the medium term … I think the growth outlook for China can be steadier and less bumpy, and that in turn means the rest of the world could benefit from that as well.”

The was last 0.07% higher at $0.6745, while the gained 0.55% to $0.6345.

The Chinese rose more than 0.2% to 6.9789 per dollar.

In cryptocurrencies, edged 0.12% higher to $16,560, while Ether gained 0.3% to $1,193.40, though both are on track for a decline of more than 60% this year.

Leave a Reply

Your email address will not be published. Required fields are marked *

New Brokers
2.8 rating
Buy & sell Crypto in minutes
3.0 rating
Note: Investing involves risks. You can lose your deposit. We advise you to only invest in financial products which match your knowledge and experience.
2.0 rating
Interactive Brokers attracts active traders with low per-share pricing, an advanced trading platform.
4.3 rating
eToro is the world’s leading social trading platform, with thousands of options for traders and investors.
Risk Warning: The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory or other services by AdonFinance. In addition, the content of the website offers no opinion with respect to the suitability of any security or any specific investment. Trading foreign exchange, stocks, cryptocurrencies and commodities is potentially high risk and may not be suitable for all investors. The high level of leverage can work both for and against traders. Before any investment with any broker you need to carefully consider your targets, previous experience, and risk level. Forex trading can result in the loss of your money, as a result, you are expressly cautioned that you should never invest or trade with money that you cannot afford to lose. For the avoidance of doubt, AdonFinance's service provides Brokers reviews in the Financial market. AdonFinance, its subsidiaries, agents or affiliates will assume no responsibility whatsoever for your trading activity. © Copyright 2021 AdonFinance