The currency recovered all of the losses suffered last week, when weaker-than-expected inflation data in the United States caused investors to move away from the dollar and back to assets associated with higher risk.
Risk appetite was hurt on Tuesday by falling German investor confidence after China’s central bank unexpectedly cut an interest rate on Monday. key to try to reactivate credit demand and support an economy affected by COVID after the publication of weak economic data for July.
“The growth picture in the US remains intact, but the global picture remains fragile, given concerns about China, and that has dampened risk sentiment,” said Sim Moh Siong, currency strategist at the Bank of Singapore.
The euro was down 0.35% at $1.0123, sterling was down 0.26% at $1.202, and the Japanese yen was down 0.86% at $134.45 per dollar.
The Japanese currency, which is often affected by the difference between benchmark yields in the United States and Japan, rose sharply last week on expectations that cooler inflation would imply a less aggressive pace of Fed tightening and, hence lower yields in the United States. However, in recent days, various Fed officials have spoken about the need to continue raising rates.
Source: Ambito
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