The safe haven U.S. dollar rises after China data, yuan eases on rate cut
Image courtesy:Future Sharks
On Monday, The safe-haven U.S. dollar has risen after a new batch of disappointing data from China strengthened global recession worries, while the yuan weakened following a People’s Bank of China surprise rate cut.
The Chinese industrial output, retail sales, and fixed-asset investment all had fallen short of analyst estimates on Monday, as a nascent recovery from draconian COVID-19 lockdowns falters.
Ipek Ozkardeskaya, market strategist at Swissquote said that bad data from China also weighs on recession worries for the rest of the world.
She further adds that it pushed down the euro against the greenback.
The dollar was also supported by Federal Reserve policymakers’ hawkish comments in response to early signs that U.S. inflation may have peaked, Reuters reports.
On Friday, Richmond Fed President Thomas Barkin told CNBC that he would like to see inflation running at the Fed’s 2% target for “some time” before stopping rate hikes.
Jens Nærvig Pedersen, chief analyst, FX, and rates strategy at DanskeBank believes that the euro is slowly finding its way back down towards parity after the spike last week.
He further said that it is too early for the Fed to take its foot off the brake, despite the drop in inflation. He maintains a hopeful U.S. dollar view.
