Dollar wobbles lower as China growth hopes lift Aussie

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SINGAPORE — The dollar began the week on

the back foot, following its first weekly loss in nearly two

months, as investors cut bets on further dollar gains from

rising U.S. rates and turned hopeful that loosening lockdowns in

China can help global growth.

U.S stock market futures bounced sharply in early

Asia trade and pulled the risk-sensitive Australian and New

Zealand dollars along for the ride.

The Aussie was last up 0.4% at $0.7080 and has

lifted 3.8% in a week and a half. The kiwi rose 0.6% to

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$0.6450, a three-week high.

“It’s a reasonably positive start to the week,” said

National Australia Bank’s head of foreign exchange strategy, Ray

Attrill.

“We did have a sharp reversal of U.S. equity market weakness

in the last hour or so on Friday, so maybe there’s some momentum

there,” he added. “The U.S. dollar looks, for the time being, to

be losing upside momentum.”

The euro and yen rose, with the yen up 0.1% to

127.83 per dollar and the euro up 0.2% at $1.0586

following last week’s 1.5% gain on the dollar.

The U.S. dollar index fell 0.1% to 102.790, about 2%

beneath a two-decade high of 105.010 made earlier in May.

“The dollar may be carving out a peak, given Europe’s

resilience to the energy shock and potential easing of lockdowns

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in China,” said Commonwealth Bank of Australia strategist Joe

Capurso.

“Given the type of policy support, we expect investment to

rebound faster than consumer spending,” he said. “Investment is

mining commodity-intensive (and therefore) very positive for

commodity currencies such as the Australian dollar and Canadian

dollar, in addition to the yuan.”

CHINA HOPE

Shanghai is edging out of lockdown and an unexpectedly big

rate cut in China last week has been taken a signal that

authorities are going to provide support to a recovery.

The city of 25 million expects to lift its city-wide

lockdown and return to more normal life from June 1.

The yuan had its best week since late 2020 last

week and firmed to 6.6861 per dollar in offshore trade early on

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Monday.

The Canadian dollar rose for a third straight week

last week and was a touch higher at C$1.2814 per dollar early on

Monday.

Sterling leapt nearly 2% last week on the back of

stronger-than-expected retail data and markets’ broader re-think

on whether global central banks are really lagging much behind

the Federal Reserve. It was last up 0.3% at $1.2527.

Geopolitics are in focus in Asia this week as U.S. President

Joe Biden tours the region, promoting greater U.S. economic

engagement and seeking to push back against China’s influence.

He meets Japan’s Emperor on Monday ahead of talks with Prime

Minister Fumio Kishida.

Australia elected a new government on Saturday, though the

market reaction was muted as polls had predicted victory for the

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center-left Labor Party and it is not expected to shift the

direction or pace of interest rate rises.

The Reserve Bank of New Zealand is expected to lift its

benchmark cash rate by 50 basis points on Wednesday. U.S.

Federal Reserve meeting minutes are also due on Wednesday.

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Currency bid prices at 0039 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar $1.0588 $1.0569 +0.18% -6.87% +1.0590 +1.0559

Dollar/Yen 127.8700 127.9100 -0.07% +11.13% +128.0500 +127.8200

Euro/Yen

Dollar/Swiss 0.9733 0.9743 -0.11% +6.69% +0.9751 +0.9732

Sterling/Dollar 1.2525 1.2496 +0.26% -7.37% +1.2529 +1.2482

Dollar/Canadian 1.2802 1.2846 -0.32% +1.28% +1.2842 +1.2805

Aussie/Dollar 0.7085 0.7052 +0.48% -2.52% +0.7090 +0.7046

NZ 0.6446 0.6410 +0.65% -5.75% +0.6451 +0.6400

Dollar/Dollar

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

(Reporting by Tom Westbrook. Editing by Sam Holmes)