Dollar declines in early trade

2 Mar 2023 , 08:17 AM

The dollar suffered losses on Thursday as Asian currencies were bolstered by optimism on China’s reopening and buoyed by positive statistics, while the euro looks poised to have its best week in a month and a half.

Overnight, the dollar fell 0.9% against the euro. Given that this occurred amid rising U.S. yields, some analysts believe the dollar may have peaked as February’s surge loses pace.

With hotter-than-expected German inflation in February adding to pressure on the European Central Bank to hike rates in response to surprisingly strong readings in France and Spain, the euro is up 1.2% on the week and last traded at $1.0667.

Later in the day, Euro zone inflation data is expected.

The dollar made significant declines against Asian currencies as it retreats from recent highs, while the yen barely changed.

The yuan experienced its largest one-day increase of the year so far on Wednesday, rising roughly 0.9%, thanks to China’s manufacturing activity exceeding expectations.

The yen was slightly firmer against the dollar on Thursday in early trade, trading at 136.04, while the Australian dollar held onto gains achieved on Wednesday despite weaker-than-expected GDP figures and some indications that inflation may have peaked.

The greatest government reorganization in a decade will take place at China’s annual parliament gathering, which starts on Sunday. This will approve President Xi Jinping’s new economic team.

The South Korean won increased by more than 1% against the dollar, making up for gains made on Wednesday after markets were closed for a holiday. The yuan last traded at 6.8731 to the dollar in offshore trade, while the Australian dollar and New Zealand dollar were both at $0.6759.

The Bank of England Governor Andrew Bailey’s comments that ‘nothing is determined’ on potential rate hikes caused traders to reduce their wagers on rate hikes to hold back sterling in other markets. At $1.2027, the pound was stable.

Later in the day, data on U.S. jobless claims as well as euro zone employment and central bank minutes are due.

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