As investors rushed to the haven dollar on Tuesday due to concerns over China’s COVID flare-ups, the dollar stabilized after rising the previous day. Bitcoin, however, came under pressure due to worry about new contagion following the bankruptcy of cryptocurrency exchange FTX.
The dollar was at 141.86 yen, down 0.18% after a 1.2% gain; the euro was up 0.14% to $1.0258 after losing 0.8% on Monday; sterling was 0.19% to $1.1838 and somewhat reversed its 0.6% decline. According to Joseph Capurso, director of international and sustainable economics at the Commonwealth Bank of Australia, what’s happening in China will take center stage.
Will There Be an End to COVID In China?
Beijing issued a warning on Monday, stating that COVID-19 was posing Beijing with its toughest test yet and that an increase in COVID cases had prompted further restriction measures.
The virus claimed lives in the nation’s capital for the first time since May. Tuesday saw more tightening of restrictions in Beijing and abroad, but currencies believed that the changes from the previous day were adequate. The dollar lost some impetus on Tuesday, according to MUFG analysts, who also cited more cautious words from Fed officials as a contributing cause.
In addition, San Francisco Fed President Mary Daly also stated that the real-world impact of interest rate rises is likely bigger than the central bank’s short-term rate objective suggests. Cleveland Fed President Loretta Mester and San Francisco Fed President Mary Daly made both statements.
Recent dollar movements have been mostly driven by market expectations of how quickly the Federal Reserve will hike interest rates. On expectations that the United States is reaching the end of its interest rate hike cycle, the dollar has been declining this month. However, more hawkish comments from policymakers broke this trend late last week, which helped Monday’s advances.