Greenback gains, Aussie tumbles after weak Chinese data

·3 min read
FILE PHOTO: U.S. One dollar banknotes are seen in front of displayed stock graph in this illustration taken

By Karen Brettell

NEW YORK (Reuters) - The safe-haven U.S. dollar bounced on Monday while commodity-sensitive currencies including the Australian dollar tumbled after a new batch of disappointing Chinese data bolstered global recession worries.

Chinese industrial output, retail sales and fixed-asset investment all fell short of analyst estimates in data published on Monday, as a nascent recovery from draconian COVID-19 lockdowns faltered.

Commodities including iron ore slumped on concerns about reduced demand from China, which hurt currencies exposed to the assets, including the Australian dollar.

“Concern about Chinese demand for commodities...at the margins it's probably encouraging a risk off attitude,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

The U.S. dollar index gained 0.79% to 106.52. The euro eased 0.97% against the dollar to $1.0157.

The Australian dollar, which is also viewed as a proxy for global growth, dropped 1.43% to $0.7021. The New Zealand dollar fell 1.45% to $0.6363.

The offshore yuan hit 6.8197, the weakest since May 16, after China's central bank cut key lending rates in a surprise move to revive demand.

The dollar index has fallen from a 20-year high of 109.29 on July 14 on hopes that the Federal Reserve will slow its aggressive pace of rate increases and that the worst of inflation increases may be behind us.

Concerns that the Fed tightening will send the economy into recession has also sent U.S. Treasury yields lower.

However, Fed officials have maintained a hawkish tone and stressed it is too soon to declare victory on inflation.

“The Fed is telling us they want to tighten financial conditions and the market has eased them, so the Fed is going to have to drive home its point with a larger rate hike,” said Chandler, adding he expects the U.S. central bank to raise rates by 75 basis points at its September meeting.

Data this week including industrial production on Tuesday and retail sales on Wednesday could also “help ease fears that the U.S. contracted again,” Chandler said, which would boost the greenback.

U.S. single-family homebuilders' confidence and New York state factory activity fell in August to their lowest levels since near the start of the COVID-19 pandemic, data on Monday showed.

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Currency bid prices at 3:02PM (1902 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 106.5200 105.7000 +0.79% 11.349% +106.5500 +105.5400

Euro/Dollar $1.0157 $1.0257 -0.97% -10.66% +$1.0270 +$1.0155

Dollar/Yen 133.3250 133.6100 -0.22% +15.80% +133.5850 +132.5550

Euro/Yen 135.42 136.93 -1.10% +3.91% +137.0700 +135.2900

Dollar/Swiss 0.9468 0.9411 +0.63% +3.82% +0.9471 +0.9409

Sterling/Dollar $1.2055 $1.2135 -0.66% -10.87% +$1.2148 +$1.2051

Dollar/Canadian 1.2908 1.2773 +1.07% +2.11% +1.2934 +1.2774

Aussie/Dollar $0.7021 $0.7122 -1.43% -3.43% +$0.7125 +$0.7012

Euro/Swiss 0.9618 0.9653 -0.36% -7.24% +0.9663 +0.9614

Euro/Sterling 0.8424 0.8451 -0.32% +0.29% +0.8470 +0.8420

NZ $0.6363 $0.6456 -1.45% -7.05% +$0.6456 +$0.6357

Dollar/Dollar

Dollar/Norway 9.7115 9.5785 +1.18% +10.02% +9.7150 +9.6040

Euro/Norway 9.8654 9.8095 +0.57% -1.47% +9.9042 +9.8188

Dollar/Sweden 10.3468 10.1833 +0.53% +14.74% +10.3497 +10.1907

Euro/Sweden 10.5105 10.4550 +0.53% +2.70% +10.5330 +10.4644

(Additional reporting by Joice Alves in London; Editing by Kirsten Donovan and Josie Kao)