Dollar nurses losses as Chinese data fuel carry trade

Source:Reuters-Global Times Published: 2017/7/17 17:48:40

The dollar huddled near a 10-month trough on Monday as investors cheered upbeat Chinese data by piling into leveraged positions and other high-yielding currencies.

Some of the biggest gains were seen in the yen crosses such as sterling, which was up 0.1 percent on the day.

China's second-quarter GDP handily topped forecasts with a rise of 6.9 percent year-on-year.

"It is encouraging for global growth as well because China is the second largest economy on the planet," said Craig James, chief economist at fund manager CommSec.

"Based on this data, there is no need for easing and no need really for tightening either because inflationary pressures are very much contained," he noted.

China's central bank lifted its official guidance for the Chinese currency's midpoint to 6.7562 per dollar, its strongest level since November 4, reflecting the dollar's broad weakness.

Monday's official guidance was 0.3 percent firmer than the previous session's fixing at 6.7774 per dollar.

The US dollar index was at 95.212,  its lowest since September.

The repeated disappointment on US consumer prices cast a question mark over the Federal Reserve's confidence that inflation would soon rebound.

"It is a mixed picture that is likely to leave the Fed cautious, and it is little wonder markets have lowered the odds of further rate hikes this year," said ANZ economist David Plank.

Posted in: MARKETS

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