Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Dollar Edges Lower; RBA Hikes Interest Rate

Forex Jul 05, 2022 15:28
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Peter Nurse

Investing.com - The U.S. dollar edged lower in early European trade Tuesday, while the Australian dollar dipped despite the country's Reserve Bank announcing a half-point rate hike.

At 3 AM ET (0700 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, edged 0.1% lower to 104.892, after climbing as high as 105.64 on Friday, close to the two-decade peak of 105.79 reached in mid-June.

Risk sentiment has been on the rise Tuesday, with stock markets generally higher, and this has weighed on the safe-haven dollar. That said, losses are limited given a strong rebound in the 10-year Treasury yield, which last traded at 2.937% from the lowest since May at 2.791% on Friday.

There was no trading in Treasurys on Monday, with U.S. markets closed for the Fourth of July holiday, which also limited activity in the foreign exchange markets.

Elsewhere, AUD/USD fell 0.1% to 0.6858 after the Reserve Bank of Australia hiked its key interest rate by 50 basis points. While this move was widely expected, the U.S. Federal Reserve's 75 basis point increase last month had fueled speculation that Australia’s central bank might be more aggressive in its tightening.

“Despite this, the Aussie dollar has been largely de-linked from monetary policy and short-term rate dynamics, while remaining primarily driven by USD moves and the global risk environment,” said analysts at ING, in a note.

“We think that a return to and above 0.7000 in AUD/USD will require quite a material stabilisation/recovery in global risk sentiment, and may only materialise in 4Q.”

EUR/USD rose 0.2% to 1.0439, ahead of the release of the final June PMI data from the Eurozone, which should show a slowing of activity in the region.

The European Central Bank is gearing up to raise interest rates for the first time in a decade later this month and traders are awaiting the release of the minutes from the June meeting on Thursday for further clues about future monetary policy.

“We think the pair runs a bigger risk of re-testing the 1.0380 May lows in the coming days rather than returning to the 1.0500-1.0600 area, given the still unstable global risk environment,” ING added.

GBP/USD traded 0.1% higher at 1.2115, while USD/JPY rose 0.4% to 136.25, with the yen hurt by the rising U.S. yields, sliding back toward a 24-year low to the greenback.

USD/CNY fell 0.1% to 6.6942, with the yuan supported by the news that China’s services activity grew at the fastest rate in June in almost a year as COVID curbs eased and demand revived.

The Caixin services purchasing managers’ index rose to 54.5 in June, indicating the fastest growth since July last year and the first expansion since February.

Dollar Edges Lower; RBA Hikes Interest Rate
 

Related Articles

Dollar Edges Higher; Recession Fears Boost Safe Haven
Dollar Edges Higher; Recession Fears Boost Safe Haven By Investing.com - Aug 16, 2022

By Peter Nurse Investing.com - The U.S. dollar edged higher in early European trade Tuesday, remaining near a one-week high as global recession fears prompted demand for the safe...

Dollar Edges Higher; Yuan Falls After China Rate Cut
Dollar Edges Higher; Yuan Falls After China Rate Cut By Investing.com - Aug 15, 2022

By Peter Nurse Investing.com - The U.S. dollar edged higher in early European trade Monday, benefiting from its safe haven status, while the Chinese yuan dipped after a batch of...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email