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The US Dollar Remains Strong versus The Australian Dollar

The safe-haven US dollar lingered near a one-week high. In contrast, the Australian dollar, euro, and Chinese yuan remained under pressure as dismal global economic data fueled recession fears.

A slew of dismal global economic indicators fueled the worldwide safety bid. On Monday, data indicated that confidence among US single-family homebuilders and factory activity in New York state dipped in August to their lowest levels since the onset of the COVID-19 outbreak.

The Dollar Index (DXY) compares the greenback to six major currencies. It remained stable at 107.51, slightly below the previous session’s high of 107.55, the highest since Monday last week.

The euro, the dollar index’s most heavily weighted currency, was barely changed at $1.0758 after falling to its lowest level since August 6 at 1.0254.

It came on the heels of unexpectedly disappointing Chinese activity figures spanning industrial output, retail sales, and fixed-asset investment, as the country’s embryonic rebound from severe Covid-19 lockdowns failed.

The dollar strengthened 0.08% against the offshore yuan to 6.8274. It is heading back toward Monday’s high of 6.7200, a level not seen since mid-May.

Sterling was 0.1% down at $1.2040, its lowest level since August 5.

The dollar fell 0.08% to 133.19 against the yen, a popular safe-haven currency.

The Australian dollar fell as low as $0.7105. It might fall below the psychologically important 70-cent threshold for the first time since Wednesday.

The New Zealand kiwi fell to $0.6349, its lowest level since Wednesday.

The Reserve Bank of New Zealand should raise interest rates by half a point again on Wednesday, with the focus on whether policymakers follow the lead of the Reserve Bank of Australia in adopting a more data-driven strategy.

The weakness of the US and Chinese economies is often a bad indicator for commodities currencies,” particularly the Australian and New Zealand dollars.

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Australian EconomyChinese EconomyCommodity PricesCOVID-19 PandemicEconomic SlowdownRecessionUS dollar

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