On Friday morning, the dollar was down in Asia, heading for the second week of losses, despite positive economic statistics giving the US currency a boost earlier in the day.
The US Dollar Index, which measures the greenback against a basket of other currencies, fell 0.04 per cent to 93.718. Meanwhile, a commodity currency surge halted late Thursday. It persisted as the Asian session opened as traders profited, according to analysts. The Canadian dollar fell to C$1.2369 per US dollar, down from C$1.2287 on Thursday, a level not seen since June 2021. The Australian dollar also lost up some ground, fetching $0.7455, down from a three-month high on Thursday.
“China’s ever-aggressive involvement in coal markets has had a big impact on energy pricing… thus we are not surprised to see a modest Australian dollar correction from very overbought levels,” Westpac analysts wrote in a report.
The USD/JPY pair rose 0.08 per cent to 114.07. This resulted from data released earlier in Japan that showed the national core consumer price index (CPI) increased 0.1 per cent year on year in September. The national CPI increased by 0.4 per cent month over month and 0.2 per cent year over year.
The AUD/USD pair rose 0.17 per cent to 0.7479, while the NZD/USD pair rose 0.16 per cent to 0.7166.
The USD/CNY pair rose 0.11 per cent to 6.3994, while the GBP/USD pair rose 0.03 per cent to 1.3794.
According to data released on Thursday, existing house sales in the United States increased to 6.29 million units in September, a 7% increase month on month. The strong news boosted the dollar. It was maintained as the Asian session began.
However, some investors were concerned since the dollar index was down 0.18 per cent for the week.
People are questioning if we are at an inflexion point since the dollar has been declining, which does not fit the broader narrative that the global economy is slowing.
The Euro and Sterling
The S&P 500 set a new record high yesterday, and news that Evergrande made an interest rate payment failed to lift most Asian bourses. At the same time, Japan and Hong Kong, among the major markets, showed minor rises.
This morning, the Dow Jones STOXX 600 is gaining ground in Europe, finishing its third straight weekly rise. The US technology sector is trading lower, impacting NASDAQ futures as the S&P 500 is barely changed.
The US 10-year yield, which touched 1.70 per cent yesterday, is a basis point or two lower. European benchmark rates are mainly higher, but lacklustre UK data is assisting Gilts in outperforming.
The pound is in trouble. Emerging market currencies are uneven, but the JP Morgan EM FX index has levelled out following yesterday’s drop. Following a 3.25 per cent decline yesterday on the heels of an extended 200 basis point rate cut, the Turkish lira has lost more than 1% today (for a 3.7 per cent loss on the week). Political and economic turbulence in Brazil resulted in the resignation of four economic team members. This resulted in a real sell-off for the fourth consecutive session yesterday, with the index down 3.6 per cent for the week as of today.