Breaking News
Investing Pro 0
New Year’s SALE: Up to 40% OFF InvestingPro+ CLAIM OFFER

Asia FX rallies on China reopening fervor, dollar hits 5-month low

Forex Dec 05, 2022 15:20
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
USD/CNY
-0.00%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DX
-0.02%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DXY
-0.08%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
EUR/USD
-0.00%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
GBP/USD
-0.03%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
USD/JPY
-0.40%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Ambar Warrick 

Investing.com -- Most Asian currencies rose sharply on Monday as more Chinese cities relaxed some anti-COVID measures, while improving risk appetite and expectations of smaller rate hikes saw the dollar sink to an over five-month low.

The yuan was the best performer for the day, rising 0.9% to 6.9628 - its strongest level against the dollar since mid-September. The offshore yuan also rose nearly 1%. 

Several Chinese cities relaxed movement curbs and testing mandates over the weekend, drumming up hopes for a broader scaling back of the government’s strict zero-COVID policy.

A wave of unprecedented anti-government protests put an increasing amount of pressure on the Chinese government to relax COVID-related restrictions, amid growing public ire over the zero-COVID policy. Slowing economic growth is also expected to force the government’s hand. 

Data on Monday showed Chinese business activity shrank for a third straight month in November. 

China is still facing a record-high daily increase in COVID infections, which may see the government hesitate in scaling back all anti-COVID measures. Analysts said that infections will likely rise as the country relaxes curbs, which could fuel some near-term volatility in markets. 

Still, the currencies of countries with high trade exposure to China all rallied on Monday. The South Korean won and the Singapore dollar surged 0.8% and 0.5%, respectively, while the Australian dollar jumped 0.9% despite data showing that local business conditions worsened in the third quarter.

Also benefiting Asian currencies, the U.S. dollar extended its declines into a fifth straight session, taking little support from data that showed the country’s labor market remained robust in November.

The dollar index and dollar futures sank 0.4% each, and traded at their weakest level since late-June, with investors sticking to the Federal Reserve’s forecast of smaller interest rate hikes in the coming months.

The central bank is expected to hike rates by a relatively smaller 50 basis points when it meets next week in its last meeting for 2022. 

Dovish signals from the Fed helped several beaten-down currencies stage a strong recovery in recent weeks. The Japanese yen traded around 134 on Monday - a near four-month high, after recovering over 13% from a 32-year low hit in October. 

Currencies outside Asia also logged strong gains on Monday, with the British pound and euro rising 0.4% each. 

The prospect of smaller interest rate hikes by the Fed has dampened the outlook for the dollar, with the greenback now set to dip below the 100 mark in the coming months. 

This scenario is positive for Asian currencies, although uncertainty over the path of U.S. inflation is likely to keep gains limited.

 
Asia FX rallies on China reopening fervor, dollar hits 5-month low
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email