US dollar banknotes are shown in this illustration taken on March 10, 2023. REUTERS/Dado Ruvic/Illustration/File Photo Acquisition of licensing rights
SINGAPORE (Reuters) – The dollar steadied during Asian trade on Monday after five straight weeks of gains, as investors looked to the Federal Reserve’s Jackson Hole symposium for guidance on where interest rates might settle in the dust of this bullish cycle. Remove.
The US dollar gained 0.7% on the euro last week, ahead of the yen and rose more than 1% on antipodean currencies as US Treasury yields jumped in anticipation of interest rates staying higher for a while longer.
In Asia, the Australian dollar was stuck at $0.6406, and the New Zealand dollar at $0.5919, uncomfortably near last week’s nine-month lows after China cut interest rates disappointed markets that were worried about a sluggish economy.
China cut its benchmark one-year lending rate by 10 basis points and left the five-year interest rate unchanged, against economists’ expectations of cuts of 15 basis points for both.
The yuan slid to the weak side at 7.3 per dollar despite the strong fixation of its trading range by the central bank.
It was last traded at 7.3070, although so far it has kept off last week’s lows after the 7.31 that brought state banks into the spot markets in London and New York hours as buyers.
Antipodean currencies often act as a liquid proxy for the yuan, due to the region’s exports to China, and are doubly vulnerable as price expectations push the dollar higher.
“The Australian dollar will continue to underperform this week in our view,” Commonwealth Bank of Australia strategists said in a note to clients.
“We believe there is a growing risk that the Australian dollar could drop below $0.60 before the end of the year. It would likely take a large Chinese stimulus package focused on commodity-intensive infrastructure spending to turn the tide lower.”
Like the yuan, the Japanese yen is also on intervention watch, having fallen to levels around which authorities intervened last year. It settled at $145.37 per dollar in Asia.
The euro settled at $1.0880. The pound sterling hovered at $1.2739. The Swiss Franc was just above a six-week low hit last week at 0.8820 per dollar.
Aside from waiting in vain for stimulus news in China, the upcoming Jackson Hole Symposium – where Fed Chairman Jerome Powell is scheduled to speak on Friday – is the main focus for markets and could set the direction for US yields.
Ten-year yields rose 14 basis points for the week and touched a 10-month high of 4.328%, within a 15-year high. The 30-year yield rose nearly 11 basis points to its highest level in more than a decade.
The theme for this year’s annual gathering in Wyoming is “Structural Transitions in the Global Economy.”
“There are two things he might run into: Decades of ultra-low rates backed by ultra-low inflation may be over,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore.
“Global policymakers may prefer to keep real rates constrained for a while, thus keeping the risk of volatile inflation alive.”
Bitcoin, which was hit to a two-month low last week as surging US yields and a slowing Chinese economy triggered a wave of selling, has consolidated those losses at $26,054.
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The currency bid prices are at 0443 GMT
All spots
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Tokyo forex market information from the Bank of Japan
(Reporting by Tom Westbrook). Editing by Meral Fahmy and Clarence Fernandez
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