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Monday, July 4, 2022
Trading

Dollar down as economic outlook remains uncertain

Dollar

The U.S. Dollar index that tracks the greenback against a basket of other currencies fell 0.29% to 104.40

The dollar was down on Monday morning in Asia as the economic outlook remained uncertain.

The U.S. Dollar index that tracks the greenback against a basket of other currencies fell 0.29% to 104.40 by 4:56 AM GMT. U.S. markets will be closed on Monday for a holiday.

The USD/JPY pair inched down 0.03% to 134.93. The Bank of Japan (BOJ) kept its ultra-loose monetary policies among its hawkish global peers, sending the yen even lower.

The market was gearing up for a BOJ capitulation (but) got exactly the opposite, sending the yen tumbling, National Australia Bank senior foreign-exchange strategist Rodrigo Catril said in a note.

The AUD/USD pair gained 0.44% to 0.6960, while the NZD/USD pair jumped 0.36% to 0.6327.

The USD/CNY pair fell 0.63% to 6.6743, and the GBP/USD pair edged up 0.11% to 1.2238.

Major central banks tightened monetary policies last week with interest rate hikes. The U.S. Federal Reserve decided to raise interest rates by 75 basis points last Wednesday, the biggest since 1994, despite rising risks of a recession. Surprisingly, the Swiss National Bank also hiked interest rates by 50 basis points on Thursday while the Bank of England followed to raise to 1.25% on the same day.

Fed Chair Jerome Powell will testify to the Senate and the House on Wednesday and Thursday. The Fed vowed last week that its commitment to tame inflation was ‘unconditional’ while Fed Governor Christopher Waller said on Saturday that he would support another hike of 75 basis points in July.

U.S. President Joe Biden said on Saturday that he was considering lifting some tariffs on China and a possible pause on the federal gas tax to fight inflation.

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