Dollar Stays Close to Two-Year High as Yuan Faces New Challenges
The dollar remains strong while the yuan struggles, raising concerns for traders and investors alike
Dollar, Yuan, Singapore, Federal Reserve, Economy
Singapore: The dollar is hanging around a two-year high, and traders are on the lookout for U.S. economic data this week. The big one is the nonfarm payrolls report coming out soon, which could give us hints about what the Federal Reserve might do next with interest rates.
Meanwhile, the Chinese yuan is in a bit of trouble. It dropped below 7.3 per dollar for the first time in over a year. The People’s Bank of China had been trying hard to keep it above that level, but it seems they’ve stopped defending it now.
As for the offshore yuan, it was down slightly at 7.3630 per dollar. Experts are saying that this shift could mean the yuan might be allowed to trade in a higher range, which could affect other Asian currencies too.
Interestingly, the Australian and New Zealand dollars didn’t seem too shaken by the yuan’s drop. They both ticked up a bit in early trading, with the Aussie at $0.6223 and the kiwi at $0.5620.
Investors are also keeping an eye on the U.S. jobs report, which could shed light on the economy’s health. Plus, several Fed officials are set to speak this week, likely reiterating that they’re still focused on tackling inflation.
The dollar’s strength is partly due to expectations that the Fed won’t cut rates as much this year. This has pushed the euro down to its lowest in over two years, trading at $1.0296. The dollar index also saw a slight rise.
With all this uncertainty around President-elect Trump’s upcoming policies, including potential tariffs and tax cuts, the dollar is getting some safe-haven support. It’s a tricky time, and many are cautious about betting against the dollar’s strength right now.
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