New York (awp/afp) – The dollar fell sharply on Monday once morest the yen, which rose for the fourth session in a row, and to a lesser extent once morest the euro, a slowdown in activity in China weighing on the greenback despite its safe haven status.
Around 6:00 p.m. GMT, the American currency lost 0.36% to 1.0257 dollars for one euro and 0.98% once morest the Japanese currency at 131.98 yen.
Since the last meeting of the American Federal Reserve (Fed) last Wednesday, the dollar has fallen by more than 3% once morest the yen.
While investors believed until now that the central bank of the United States was going to raise its rates at high speed to counter inflation, they now believe that the weakening of growth will put a spoke in its wheels.
Result, the flight of the dollar, which reached heights in several decades vis-a-vis the euro as with the yen, ran out of steam.
“Better-than-expected European GDP data last Friday, coupled with another record high inflation, supported the euro as there is an increase in the likelihood of a 50 basis point hike by the European Central Bank (ECB). ) in September,” Western Union analysts said in a note.
Growth in the euro zone accelerated to 0.7% in the second quarter and inflation rose to 8.9% in July.
For Ulrich Leuchtmann, an analyst at Commerzbank, the weakness of the dollar might also be justified by the slowdown in manufacturing activity in China in July, which will weigh on energy demand.
“If energy prices stop rising the value of US goods exports will no longer rise. A major factor in the strength of the dollar in recent months is fading,” he said. Oil prices fell more than 4% on Monday.
As a result, traders favor the yen, another safe haven, rather than the dollar.
But analysts aren’t convinced this bout of greenback weakness will last: “The market is eager to see the Fed pivot ‘and shift its focus to supporting growth rather than fighting inflation,'” but it’s not yet,” said Markets.com analyst Neil Wilson.
Especially since in the euro zone, “a recession is becoming more and more likely and it will be exacerbated by the European Central Bank (ECB), forced to raise its rates to prevent inflation from getting out of control”, according to Craig Erlam, analyst at Oanda.
The British pound also climbed once morest the dollar (+0.67% to 1.2253 dollars) as eyes are fixed on the Bank of England and its monetary meeting on Thursday. “Money markets are pricing in an 86% chance of a 50 basis point hike, so if the BoE disappoints, the pound might fall sharply,” said Western Union.
Cours de lundi Cours de vendredi
18H00 GMT 21H00 GMT
EUR/USD 1,0257 1,0220
EUR/JPY 135,37 136,20
EUR/CHF 0,9756 0,9734
EUR/GBP 0,8370 0,8397
USD/JPY 131,98 133,27
USD/CHF 0,9512 0,9524
GBP/USD 1,2253 1,2171
afp/rp
