The DXY index, which measures the dollar against a basket of major currencies, fell on a blank chart day this Tuesday the 27th amid low appetite for safe-haven assets.
The DXY index, which measures the dollar against a basket of stronger currencies, fell on a blank chart day this Tuesday the 27th amid low appetite for safe-haven assets. The focus was on optimism stemming from China’s ramping up reopening, despite recent snowfall in the US that raised concerns about the potential impact on the world’s largest economy.
By late afternoon in New York, the euro rose to $1.0644, the pound lost to $1.2029 and the dollar rose to 133.54 yen. DXY fell 0.13% to 104,179 points.
After China yesterday detailed a relaxation of rules related to the Covid-19 pandemic, the Asian country’s National Immigration Department announced today that it will resume issuing passports to nationals traveling abroad for tourism or visiting friends and family, in addition to resuming certain transit visas for international passengers.
“China is front and center in the markets right now,” said Hani Reda, portfolio manager at PineBridge Investments. “Without that, it was pretty clear to us that we were going to have a pretty broad global recession. Now that China is moving in the opposite direction, you can mitigate that,” he adds. The dollar exchange rate still fell to 6.9718 yuan.
In the USA, a state of emergency has been introduced in the state of New York due to the winter storm. For analysts, the country’s Gross Domestic Product (GDP) in the fourth quarter should be affected, but not strongly. Goldman Sachs projects that the U.S. will avoid recession in 2023 and instead continue progressing toward a soft landing. We expect the FOMC to raise interest rates by 25 bp in February, March and May, then hold rates at 5-5.25%. The rest of 2023. We are skeptical that the FOMC will cut the funds rate before the economy threatens to slip into recession, and we do not expect that to happen next year,” the bank predicted.
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