Wed, May 22, 2024

The Dollar Fell in Value

dollar

The Dollar Fell in Value

The dollar fell on Monday as investors weighed the recent drop in US government bond yields, while China’s yuan fell to a two-week low due to anti-government protests. Protests erupted across China. On Sunday night, hundreds of protesters and police officers clashed in Shanghai.

The onshore yuan in China finished the domestic session around 0.501 lower at 7.1919 per dollar, the lowest close since November 10. In Asian trading, the offshore yuan fell to a more than 2-week low, closing down 0.1% at 7.201.

Currencies

The Australian dollar, frequently used as a proxy for the yuan, fell 0.7% to $0.671.

In currency markets elsewhere, the dollar was last down 0.991% to 137.771 yen. It hit 137.57 earlier in the session, its lowest level since August 26.

According to Stephen Gallo, falling US bond yields make the dollar less appealing.

On Friday, the People’s Bank of China announced that it would reduce the reserve requirement ratio for banks by twenty-five basis points beginning in December.

The latest developments in China appeared unable to halt the US dollar’s decline, which has been softening in recent weeks on expectations that the Fed will soon slow its rate hikes – a view supported by minutes from the Fed’s Nov meeting released last week.

The US dollar index opened higher on Monday after closing at 106.05 on Friday but ended the day down 0.66% at 105.65.

Meanwhile, the euro gained 0.41% to $1.0445, while the pound gained 0.17% to $1.21.

GBP/AUD has risen to 1.8023 after three weeks of consecutive gains, revealing a cluster of technical resistance in the 1.8130-1.82 region.

As a result, the resistance is approximately 100 pips higher than current levels and could halt the recent advance.

For those hoping for a stronger GBP/AUD, the gains of the last three weeks have yet to fully offset the one-week loss suffered in the week beginning October 31.

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