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Dollar rises, gains against yen and yuan

Dollar rises

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.06% to 100.675

The dollar was up on Friday morning in Asia. The greenback headed for a seventh consecutive weekly gain on the yen and the best one-week rise on China’s yuan in more than two years, boosted by higher U.S. yields.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.06% to 100.675 by 3:15 AM GMT.

The USD/JPY pair edged up 0.18% to 128.62. The AUD/USD pair was down 0.41% to 0.7341, with the Australian dollar falling 1% on Thursday and remaining near its 50-day moving average in Asian trade. The NZD/USD pair fell 0.51% to 0.6706 after the New Zealand dollar also dropped 1% overnight.

Commodity currencies fell overnight as economic growth worries and the impact of the COVID-19 lockdowns in China capped oil’s gains.

The USD/CNY pair was up 0.33% to 6.4716 while the GBP/USD pair inched down 0.07% to 1.3019.

With China easing its monetary policy and Japanese government bond yields near zero, both the yen and yuan were on downward trends.

The yen is down 1.6% for the week to date and was just above Wednesday’s 20-year low of 129.43. The yuan, on its part, tumbled through its 200-day moving average throughout the week and hit a fresh seven-month low of 6.4830 in offshore trade earlier in the session.

Meanwhile, U.S. Federal Reserve Chairman Jerome Powell said overnight that a 50 basis-point rate hike was on the table at the central bank’s next meeting in May 2022. His remark, although largely consistent with market expectations, saw five-year U.S. yields climb above 3% for the first time since 2018 and eased a rally in the euro.

The euro last bought $1.0837 and remains just above a two-year low.

The swaps market has now priced in 146 basis points of tightening for the next three (Fed) policy meetings, Commonwealth Bank of Australia analyst Carol Kong told Reuters.

The dollar may receive further support from safe haven demand today if the April PMIs generate market concerns about the global growth outlook, she added, in reference to manufacturing purchasing managers index figures due in Europe, France, Germany, the U.K., and the U.S.

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