The dollar fell on Wednesday as an uncertain economic outlook worsened among traders, while China’s yuan strengthened as authorities eased some of the country’s coronavirus rules.
The dollar has fallen in recent weeks on expectations that the Federal Reserve will soon halt interest rate hikes, and with the euro in rise amid signs that the economic slowdown in Europe could be less serious than feared in precedence.
However, upbeat US jobs, services and manufacturing data in recent days have raised questions about the Federal Reserve’s slow pace of rate hikes, complicating market expectations for the dollar.
The dollar struggled to find direction on Wednesday, with the euro falling early in the session before climbing 0.28% to $1.05.
The dollar was up 0.35% against the Japanese yen to 137.48, but fell 0.25% against the British pound to $1.216.
The bankers senior by JP Morgan, Bank of America and Goldman Sachs said banks are preparing for the economy to deteriorate next year, as inflation and high interest rates impact consumer demand.
Some investors believe that concerns about the global economy will support the dollar, as it is considered a safe haven, while others believe that the decline in the US currency (the dollar index has fallen about 8% since September), will continue as global inflation slows.
Against a basket of currencies, the dollar index fell 0.15% to 105.39 on Wednesday but is still in up about 10% for the year.
In Asia, China’s yuan held firm as the government announced measures marking an abrupt change in its strict policy to prevent the spread of the coronavirus, which has hurt its economy and sparked historic protests.
China’s national health authority said asymptomatic Covid cases and those with mild symptoms can auto- take care of yourself during the home quarantine.
The announcement was the strongest signal that China is preparing its people to live with the pandemic, even as analysts say the road to full reopening of the economy will be long and bumpy.
The onshore yuan rose 0.25% to 6.978 to the dollar.
However, markets were also digesting disappointing data showing Chinese exports and imports in November in contraction, at their fastest pace in at least two and a half years.
The Australian dollar fell 0.1% to $0.668. While the New Zealand kiwi rose 0.19% to $0.633.
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