Business Standard

US Dollar steadies as China tightens Covid-19 curbs, bitcoin under pressure

The euro was up 0.14% to $1.0258 after an 0.8 %loss on Monday, sterling rose 0.19% to $1.1838, partially reversing its 0.6% fall, and the dollar was at 141.86 yen down 0.18% after a 1.2% gain

US dollar, Dollar

Photo: Bloomberg

The dollar steadied on Tuesday after rallying the previous day as investors flocked to the safe haven currency on worries over China's COVID flare-ups, while bitcoin came under pressure after fears of fresh contagion from the collapse of crypto exchange FTX.
The euro was up 0.14% to $1.0258 after an 0.8 %loss on Monday, sterling rose 0.19% to $1.1838, partially reversing its 0.6% fall, and the dollar was at 141.86 yen down 0.18% after a 1.2% gain.
"What's going on in China is going to take centre stage," said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia.
"There does seem to be some ... increased restrictions on movement of people, and I think there's going to be inevitable economic impacts."
Beijing warned on Monday that it was facing its most severe test of the COVID-19 pandemic, with a surge in COVID cases sparking fresh restriction measures. Deaths from the virus were also recorded in the capital for the first time since May.
Restrictions in Beijing and elsewhere tightened further on Tuesday, though currencies seemed to think the previous day's moves were sufficient.
MUFG analysts noted that more cautious remarks from Fed officials were also been a factor in the dollar losing some momentum on Tuesday.
Cleveland Fed President Loretta Mester said the central bank can downshift to smaller interest rate hike increments from next month, and San Francisco Fed President Mary Daly said the real-world impact of interest rate hikes is likely greater than its short-term rate target implies.
The major factor driving dollar moves in recent months has been market expectations of how aggressively the Federal Reserve will raise rates.
The dollar has been weakening this month on hopes that the United States is nearing the end of its interest rate hiking cycle, though more hawkish remarks from policy makers disrupted this trend late last week, which also contributed to Monday's gains.
The fresh bout of risk aversion related to China weighed particularly on the antipodean currencies - often used as liquid proxies for the Chinese yuan - with the Aussie sliding nearly 1% on Monday. It recouped some losses on Tuesday, rising 0.24% to $0.6631.
The dollar fell 0.5% on the offshore yuan to 7.1412, having gained 0.7% overnight.
In cryptocurrencies, Bitcoin fell to a new two-year low of $15,479 on Monday, another victim of the rush to the dollar, and also amid jitters about the health of crypto broker Genesis.
Genesis said on Monday it has no plans to file for bankruptcy imminently, though Bloomberg News reported, citing sources, that Genesis was struggling to raise fresh cash for its lending unit, and warning investors it may need to file for bankruptcy if it does not find funding.
The lending unit suspended redemptions last week, citing fallout from the collapse of FTX, which filed for bankruptcy on Nov 11.
(Reporting by Rae Wee; editing by Kim Coghill and Jason Neely)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Nov 22 2022 | 6:08 PM IST

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