Dollar rises after China data, yuan falls with rate cut

The safe-haven US dollar rose on Monday after a fresh batch of disappointing data from China reinforced fears of a global recession, while the yuan fell after the People’s Bank of China surprisingly cut interest rates. China’s industrial production, retail sales and fixed asset investment missed analysts’ estimates on Monday, as the nascent recovery from harsh lockdowns to combat the COVID-19 pandemic faltered. “Of course the bad data from China affects recession fears for the rest of the world,” said Ipek Ozkardskaya, market analyst at Swissquote. He added that this pushed the euro down against the dollar. The dollar also received a boost from hawkish comments from Federal Reserve policy makers, in response to early indications that US inflation may have peaked. Richmond Federal Reserve Chairman Thomas Barkin told CNBC on Friday that he would like to see inflation head toward the Fed’s 2 percent target “for some time” before stopping interest rate hikes. The onshore yuan fell to a one-week low of 6.7696 per dollar, compared to the previous close of 6.7430, after the People’s Bank of China unexpectedly cut borrowing costs on medium-term loans and a short-term liquidity instrument for the second time this year. The US dollar index against six rival currencies rose 0.25 percent to 105.96, consolidating its position near the middle of its range this month. Analysts will look at the minutes of the Federal Reserve’s latest meeting, due on Wednesday, for more clues about what policy makers are thinking, while Friday’s retail sales data will give some fresh insights into the economy’s health. The euro fell 0.24 percent to $ 1.0232, affected by the troubles facing Europe due to the war in Ukraine, the search for non-Russian energy sources and the damage to the German economy from the lack of rain.

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