FOREX-Dollar starts the week on solid footing with a firm safe haven offer

Band Alun John

HONG KONG, May 16 (Reuters)The dollar started the week just off a 20-year high against its peers on Monday, as investors sought safety amid fears over global growth while cryptocurrency markets appeared to find some stability after the lows. turbulence of the past week.

The dollar index =USD was at 104.54, after briefly crossing the 105 level on Friday, its highest since December 2002, after six successive weeks of gains.

Investors flocked to the safe-haven currency amid worries about the US Federal Reserve’s ability to dampen inflation without triggering a recession, as well as worries about slowing growth resulting from the Ukraine crisis and the economic effects of China’s zero COVID-19 policy.

“The general strength of the dollar is supported by growing concern over global growth,” Barclays analysts said.

They said events to watch this week included U.S. retail and production data due Tuesday, as well as public remarks from several Fed officials.

“Emphasis will be on any potential reiteration/pushback on the idea that 75 basis point rate hikes are not on the cards at this time.”

Markets are pricing in 50 basis point hikes at the next two Fed meetings, according to CME’s Fedwatch tool, but with the possibility of bigger increases.

Chinese retail and production data due later Monday is also high on the agenda.

“A weaker growth outlook in China should keep pressure on G10 commodity currencies and support the USD,” Barclays said.

The euro started the week languishing near its lowest level since early 2017, suffering from dollar strength and the European economy’s exposure to the Ukraine conflict.

The single currency EUR=EBS was at $1.0398 on Monday morning, just above the $1.0354 level hit on Thursday, its lowest since early 2017.

There are also plenty of speeches from senior European Central Bank officials this week for investors.

Sterling GBP=D3which suffered with the euro, was at $1.2256 on Monday, after falling to $1.2156 last week, hurt by weaker than expected GDP figures in the first quarter.

In the coming week, Britain will have data on the labor market, inflation and consumer confidence.

The Japanese yen JPY= was a bit softer on Monday morning at 129.43 yen per dollar. Last week it had its first week of gains since early March as fears for growth meant that US Treasury yields halted their advance.

With yields locked in Japan, the yen is vulnerable to rising US yields.

Crypto markets, which trade around the clock, had a quiet weekend after last week’s turbulence caused by TerraUSD, a so-called stablecoin, which broke its peg to the dollar.

Bitcoin BTC=BTSP was trading around $31,000 after falling to $21,400 on Thursday, its lowest since December 2020.

World exchange rates

(Reporting by Alun John; Editing by Sam Holmes)


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