Singapore, March 2 (BNA): The dollar caught its breath in Asia on Thursday, steady as US yields rose while investors waited for European inflation data, after nasty surprises in Germany, France and Spain gave a boost to the euro. week.
The dollar lost 0.9 percent against the euro on Wednesday, its biggest drop in a month. The euro was steady by about 0.2% on Thursday, with the single currency trading at $1.0649 in Asian trade ahead of inflation data due at 10:00 GMT.
With higher-than-expected German inflation in February adding pressure on the European Central Bank to raise interest rates after unexpectedly strong readings in France and Spain, markets are bracing for another uncomfortably high reading.
“Expectations are for a slower rise… down from the last reading of 8.6%, but that contrasts with French and Spanish CPIs that have accelerated recently,” said Christopher Wong, strategist at OCBC Bank in Singapore. “A bullish surprise could add some strength to the euro.”
The US Dollar Index rose 0.2% to 104.58, and that helped lift US Treasury yields to a new high during Asian trading, and with Federal Reserve official Neel Kashkari leaving the door open for a 50 basis point rate hike at the next Fed meeting. In March, according to the British newspaper The Guardian. Reuters.
Elsewhere, the yen held somewhat steady at 136.40 per dollar, while the Australian and New Zealand dollars and the Chinese yuan fluctuated slightly after strong gains on Wednesday backed by massive Chinese manufacturing data.
The Australian dollar needs to clear its 200-day moving average at $0.6794 to continue its recovery. It was last up 0.2% on Thursday at $0.6746. The New Zealand dollar, which rose 1.2% on Wednesday, fell 0.4% on Thursday to $0.6230.
The Chinese yuan settled again at 6.8928 per dollar, after recording its biggest jump in 2023 on Wednesday.
Investors are looking forward to the National People’s Congress meeting, which begins on Sunday, with a focus on guidance on policy support for post-COVID recovery.
“Yesterday’s positive surprise in China’s February PMIs was positive for mining commodity prices and the currencies of the exporting countries,” said Joe Capurso, head of international economics at the Commonwealth Bank of Australia.
“We consider that the Australian dollar can rise significantly in the weeks following the two-sessional meetings of China,” he said.
“The yuan and commodity currencies such as the Australian and New Zealand dollars could rise substantially if the meeting sends a pro-growth signal, as we expect.”
Elsewhere, the pound faltered on comments from Bank of England Governor Andrew Bailey, who said that “nothing has been decided” about future rate hikes prompting traders to cut their bets on higher rates. The pound sterling fell 0.2% to $1.2005.
Bitcoin made slight progress despite the dollar’s decline and was last seen at $23,493. Troubles at cryptocurrency bank Silvergate weighed on the mood and the bank’s stock fell 28% on Wednesday after it warned it would delay its annual report and assess its ability to operate.
Besides European inflation, minutes from the Eurozone Employment and Central Bank meeting are due later in the day, as well as US jobless claims data.
HF