On Tuesday, dollar edged up but in a limited range, as investors were wary to enter new positions ahead of a crucial U.S. inflation reading this week, while the spotlight in Asia shifted to China's trade data later in the day. According to a Reuters poll of economists, China's exports are anticipated to decline by 12.5% …
On Tuesday, dollar edged up but in a limited range, as investors were wary to enter new positions ahead of a crucial U.S. inflation reading this week, while the spotlight in Asia shifted to China’s trade data later in the day.
According to a Reuters poll of economists, China’s exports are anticipated to decline by 12.5% YoY in July, continuing a dip of 12.4% in June and marking the worst result since the pandemic’s early days in February 2020. The trade statistics came a day before the country’s inflation reading. Markets are keeping an eye for more evidence of deflation in the world’s second-largest economy.
With the data released, the offshore yuan scarcely changed at 7.2039 per dollar. Meanwhile, the Australian and New Zealand currencies, which are frequently viewed as liquid proxies for the yuan, were down in early Asia trade. The Australian dollar declined 0.05% to $0.6571, while the kiwi fell 0.08% to $0.6102.
A currency strategist at Commonwealth Bank, Australia predicts a weaker economic data would continue to paint a picture of a slowing Chinese economic recovery. As the relation between the Chinese Yuan with Australian dollar and the kiwi has been rather strong lately, it is believed that the Aussie and kiwi may have more downside.
In the global currency market, the U.S. dollar gained 0.37% against its Japanese counterpart, closing at 142.98 yen. According to data released on Tuesday, Japanese real earnings decreased for the 15th consecutive month in June due to unrelenting price increases. Nominal pay growth remained steady despite rising compensation for high-income workers and a broadening labour crunch.
Dollar index increased by 0.14% to 102.22, pulling away from a one-week low touched on Friday in the aftermath of a mixed US jobs report. While all eyes now on Thursday’s inflation data, it is expected to show core consumer prices rising 4.8% year on year in July.
CIO in Dalma Capital mentioned that with the Fed’s interest rate setting still heavily reliant on data, every data point has elicited an even higher level of scrutiny. While some may claim that the U.S. current economy outlook is heading towards a strong direction, which would inevitably lead to higher inflation risk.
Risk disclaimer:
Please note that this article does not offer any instructions or suggestions regarding investment decisions. It is important for you to conduct your own research or seek professional advice from a qualified professional before conducting an investment decision.
