On Wednesday, the dollar lost ground to commodity currencies like the Australian dollar and the euro, which gained strength from a slew of data that suggested that European inflation may have reached its peak.
Investors who have grown more confident about the possibility that China’s relaxation of strict COVID restrictions will give the world’s second-largest economy new life were already exerting pressure on the dollar. Data released on Wednesday revealed that French consumer price pressures in December had decreased significantly more than anticipated. Data released the day before in Germany revealed a similar inflation trend. The picture painted by last week’s Spanish inflation data was similar.
The euro zoomed up by as much as 0.82% as traders seized upon the notion, which had seen its largest one-day decline against the USD in two months on Tuesday (ECB). This might subsequently imply that the economy won’t suffer as much. The euro last moved higher against the dollar, up 0.5%, at $1.0603, and against the yen, up 0.3%, at 138.55.
The Australian dollar was the star performer on Wednesday, roaring as much as 2.3% higher against its American counterpart due to optimism regarding China and news that Beijing is considering lifting a ban on coal imports from Australia.
At $0.6864, the Australian dollar was last up 2%, on pace for its biggest one-day gain in nearly two months. To $0.6315, the New Zealand dollar increased by 1.1%.
At 6.891, the offshore yuan increased by 0.47% against the dollar, approaching its highest level in more than four months.
China’s state-run media declared a “final victory” over the pandemic, encouraging market speculation that China’s rules-loosening and reopening were irreversible.
While the sterling increased by 0.7% to $1.2056, the yen increased by 0.3% to about 130.66 against the dollar.
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