Yahoo Finance Dollar Recovers; China Promises To Open Up More
Investing.com - The dollar gradually picked up in Asia on Tuesday morning after a plunge overnight amid reports of FBI raiding the office of U.S. President Trump’s lawyer. Investors also awaited Chinese president Xi Jinping’s speech at the Boao Forum in early morning to see how the trade disputes between the world’s two largest economies would develop. Xi pledged to ease investment limits to open up the country further, showing signs of easing Sino-U.S. trade tensions.
The U.S. dollar index that tracks the greenback against a basket of six major currencies last stood at 89.59 at 10:49PM ET (02:49 GMT), up 0.06%. The dollar tumbled from 89.95 overnight to Tuesday’s morning low at 89.49, but gradually recovered in late morning.
Reports that federal agents raided the offices and home of Trump’s personal lawyer Michael Cohen were in focus overnight in Asia, prompting investors to turn to the safe-haven yen.
More directional drivers for the greenback include March’s producer price index that is due later in the day. Inflation growth at the wholesale level as measured by the producer price index is expected to have cooled to 0.1% in March from 0.2% in the prior month.
In China, The People’s Bank of China set the fix rate of yuan against the dollar at 6.3071 versus the previous day’s 6.3114. The USD/CNY pair eased 0.23% to trade at 6.2902.
Reliant on an export-driven economy, China is reportedly considering gradually depreciating the yuan in face of widespread tariffs in the U.S. Officials are studying the impacts of leveraging the currency as a tool to negotiate with the U.S. as well as the results of devaluing the yuan to offset the loss from the trade deals. But analysts said the depreciation of yuan would expose China to the risk of financial-market volatility.
The yuan has gained around 9% against the dollar since the beginning of 2017 and has steadied in recent weeks despite the mounting trade tensions with the U.S. The yuan touched the strongest level since August 2015 last month.
The USD/JPY pair edged up 0.37% to 107.18. The Bank of Japan’s governor Haruhiko Kuroda said the Bank will consider how to normalize monetary policy amid other tasks during the next five years.
“We will make the best efforts to meet the price-stability target, and eventually we will also have to consider the process of policy normalization,” said Kuroda.
Elsewhere, the AUD/USD pair surged 0.51% to trade at 0.7737. The Aussie still held on its bulls although the March confidence index from the National Australia Bank slipped to 7, missing the expected 12.
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