The dollar and Japanese yen both found support
in a choppy Asia session on Monday, benefiting from a bid for safety as
investors worried rising interest rates and softening economic data could
signal a global recession is on the horizon.
While
stocks followed Wall Street higher, currency traders were wary of extending
Friday’s dollar selling too much because the dollar typically rises in times of
uncertainty.
The
risk-sensitive Australian dollar was shaky along with commodity prices through
the Asia session, and was last down 0.1% at US$0.6935.
The
euro was pinned at US$1.0564. The beaten-down yen steadied at 134.81 per
dollar. The U.S. dollar index was steady at 104.000, after reaching a 20-year
peak of 105.79 earlier in the month.
Weakening
U.S. economic data knocked it off that perch last week, and a survey released
on Friday showed consumer confidence at a record low, giving another prompt for
investors to cut back bets on U.S. interest rate hikes.
But
the spectre of a global slowdown, and a preference for dollar-denominated
assets in such times, has prevented further falls.
“The
dollar tends to rise when people worry about a global recession,” said
Commonwealth Bank of Australia strategist Joe Capurso in Sydney.
Futures
pricing shows traders now anticipating the U.S. Federal Reserve’s benchmark
funds rate stabilising around 3.5% from March next year, a pullback from
pricing in rates zooming to around 4% in 2023. Treasuries rallied last week.
The
New Zealand dollar hovered at US$0.6321, while sterling was stuck at US$1.2285.
Chinese
factory activity data due to be released later this week could provide a guide
as to whether the world’s second-largest economy is finding momentum again
after the disruption caused by strict COVID-19 lockdown measures.
China’s
yuan caught a boost after Shanghai’s top party boss declared victory over
COVID-19 and it was last up slightly at 6.6856 per dollar.
Elsewhere,
Russia’s rouble fell in the interbank market as Russia headed for its first
sovereign default since the Bolshevik revolution a century ago.
The
rouble was last quoted at 53.60 per dollar, which is actually stronger than
where it sat before Russia’s invasion of Ukraine, though sanctions make it
sparsely traded.
Source: Reuters