The United States dollar seemed to keep to the downside for the third consecutive day on Tuesday. Investors cashed out and cut their bets on the US interest rate hike to push for further gains. The American dollar fell from the two-decade high of 105.010 and settled for 104.169 in the dollar index.
The dollar settled 0.8% below last week’s value three days into the new week. Yet, according to John Briggs from Natwest Markets, the dollar’s narrative changes from inflation to growth. He believes that the greenback has calmed lately due to a lack of reasons for interest rate hikes. The currency, however, would still be receiving support as a “driver of gain shifts,” he added.
The investor community is looking earnestly at some key appearances from the Federal Reserve to get a hint on whether the rates could get aggressive in the short term. They are also speculating whether the central banks will catch up with the future market prices for June and July. According to many, despite having a calm trajectory, the USD is still the lucrative option in the market.
The dollar’s position is holding well against the Swiss Franc, as per Tuesday’s reports. Moreover, the greenback has enough potential to maintain its front foot position in the Asian market. The USD/INR pair set a new record last week while the Indonesian rupiah fell lowest since 2020 against the dollar.
Nonetheless, the G10 economy seems to gain ground as the Chinese yuan performed this week. Chris Weston, head of research at Pepperstone, said that Dollar/ yuan had been a big driver of G10 currencies and potentially paused the USD’s rally this week. Check out this comprehensive Pepperstone forex review if you plan to utilize the current market conditions in your favor.
The Chinese yuan steadied itself from last month’s 6% drop and is currently trading at 6.7795 against the dollar. The rise could have been fueled by the mitigating conditions in Shanghai, as the city has recorded zero cases in the last three days. Experts believe that this will be a sigh of relief for other cities under lockdown in China.
After an initial successful rally in February as the commodity prices rose, the Australian dollar fell last week to record its new two-year low. But, the Antipodean currency managed to make it up with a 2.5% bounce this week. The Australian dollar also looks forward to another rally during the upcoming interest rate hikes following the release of wages data on May 18. The Kiwi could get up to a 2% increase this week and was the last trading for $0.6333.
The pound Sterling posted a healthy 1.5% gain from its two-year low. As per Tuesday’s reports, the GBP is firmly anchored at $1.2341. On the other hand, the Japanese yen got to 129.37 against the dollar holding just above a two-decade plunge.