Around 9 p.m., the greenback gained 0.98% to 1.0158 dollars for one euro. Against the Chinese currency, whose exchanges are regulated, the dollar rose to 6.8110 yuan once morest 6.7649 yuan at 11 a.m.
The dollar climbed once morest major currencies on Monday, playing its safe-haven role once morest a sharply weaker yuan following a rate cut by China’s central bank and ahead of the release of Fed minutes this week.
Around 7:00 p.m. GMT, the greenback gained 0.98% to 1.0158 dollars for one euro.
Against the Chinese currency, whose exchanges are regulated, the dollar rose to 6.8110 yuan at 7:00 p.m. GMT once morest 6.7649 yuan at 9:00 a.m. GMT.
“Several factors are working in favor of the dollar and there is a loss of risk appetite following weaker economic data in China and the surprise rate cut by the Central Bank of China,” said Kathy Lien of BK Asset Management.
“Retail sales and industrial production in China are below analysts’ expectations, which is pushing the markets towards the safety of the dollar”, summarized for their part the analysts of OFX.
Retail sales rose 2.7% year on year last month, from 3.1% in June.
For its part, industrial production rose last month by 3.8% over one year, but this rate is lower than that of June (3.9%).
To cope with this downturn in activity, the Chinese Central Bank (PBOC) surprised by lowering several of its key rates.
“The PBOC was reluctant to lower its rates to prevent the exchange rate difference with the dollar from widening, while the Fed (US Federal Reserve) is on the contrary engaged in an upward cycle”, commented Charlie Lay, analyst at Commerzbank.
According to him, the intervention of the Chinese issuing institute shows that the weakness of the economy, weighed down by the zero Covid policy, left him no choice, but also that the authorities believe they can intervene if the fall in the yuan is too marked.
On the side of the US economy, even though industrial activity in the New York area showed a sharp decline with the Empire State index released on Monday, “the release of the Reserve Monetary Meeting Minutes federal (“the Minutes”) on Wednesday, which might be more severe” on rates, encouraged investors to “head towards the dollar and its status as a safe haven,” said Kathy Lien.
Trading volumes were also reduced, which encourages volatility”, “with part of Europe on leave for a holiday”, recalled analysts from OFX.
