Tue, September 26, 2023

Yuan Dips Beyond Milestone, Will Dollar Dip Continue?

Dollar vs Yuan

Investors anticipated the U.S. Fed to be proactive when it raises interest rates next week, which led to the dollar index’s tiny decline on Friday but gain for the week. Meanwhile, the Chinese yuan fell through the crucial 7 per dollar level.

Following U.S. statistics showing a minor improvement in consumer confidence in September, the dollar generally maintained a modest rise. The preliminary September reading of the overall consumer mood index from the University of Michigan was 59.5, up from 58.6 in the preceding month. The dollar’s value versus a basket of currencies dropped by 0.1% to 109.68. This month, it rose to a two-decade high of 110.79. It increased by 0.6% for the week and has increased by nearly 15% so far this year.

Investor’s Anticipations

The senior market analyst at Oanda in New York, Edward Moya, explained that resistance is being shown to the notion that the currency and rates are extremely close to reaching their peaks. There are several confident recommendations for the dollar to rise. That stance will likely be firmly reflected after next week’s FOMC meeting.

Investors anticipate a strong likelihood of a 75-basis-point rate rise. Moreover, they expect a slight possibility of a 100-bps increase at the meeting next week. Ether, the cryptocurrency used in the Ethereum network, dropped to its lowest point since late July and was last trading down 2.8%. Last time, Bitcoin dropped 0.47% to $19,598.00. The offshore yuan passed 7 per dollar overnight due to the strengthening dollar for the first time in more than two years.

Like the offshore unit, the Friday am market opening saw the critical level broken. The economy of China was unexpectedly robust in August, according to data, with manufacturing output and retail sales both expanding faster than anticipated. But worsening real estate collapse clouded the picture. Sterling recently traded down 0.5% at $1.1416 versus the dollar, while the euro was up 0.1% at $1.0008.


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