Majority of Global FX currencies fell on Monday as dismal economic data from China weakened investor confidence and markets braced themselves for this week’s Federal Reserve meeting.(Read More)
After data revealed that the nation’s manufacturing sector unexpectedly contracted in October, the value of the Chinese yuan and the offshore yuan both declined by 0.2%. As COVID-19 instances unexpectedly increased in various economic centres, general business activity subsequently surprisingly decreased.
The report increased worries about China’s faltering economic development, which is still suffering from a number of lockdowns this year. Following an increase in infections, major economic centers like Wuhan and Chengdu recently reinstituted COVID limits.
In particular, following Beijing’s reiteration of its commitment to its stringent zero-COVID policy. Investors are on on edge about potential future economic disruptions in China.
China’s market weakness spread to the rest of Globe. The Taiwan dollar lost 0.4% and the Indian rupee fell 0.1%.
The Japanese yen dropped 0.2% as a result of data showing that industrial activity slowed down even more in September and that the forecast for the following two months is still negative.
This year, the yen suffered greatly due to rising inflation and the Bank of Japan’s dovish stance. Trading close to its lowest level in thirty two years.
Increase Interest Rate.
On Monday, the dollar’s price was unchanged, and both the dollar index & the dollar index futures were trading near 110.
The dollar is anticipated to strengthen in the days ahead as traders prepare for the Federal Reserve to raise interest rates by at least 75 basis points on Wednesday.
Markets are expecting that in the next months the Fed would moderate its hawkish approach in response to indications that inflationary pressures are beginning to ease. On the basis of that idea, the dollar & U.S. Treasury yields declined to multi-year highs in October.
However, the outlook of Asian currencies is still limit. Particularly given that U.S. interest rates are expect to remain high with at least the upcoming year. This year, Asian currencies saw significant losses due to rising interest rates.
The Australian dollar increased 0.1% against other antipodean currencies as data revealed that retail sales increased more than anticipated in September. Improving the prospects for Australian economy.
The favourable assessment also demonstrates the Reserve Bank of Australia’s ability to raise interest rates indefinitely in order to combat inflation.