Dollar strengthens

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TOKYO- The risk-sensitive Australian and New Zealand dollars retreated from near two-month highs against the greenback on Monday due to disappointing data from China, a key trading partner, while the Chinese yuan weakened after a surprise cut in interest rates.

The greenback edged higher as traders continued to weigh data that has raised the possibility that US inflation may be peaking against Federal Reserve policymakers’ hawkish comments.

The US dollar index, which gauges the currency against six major peers, edged 0.07 percent higher to 105.77, consolidating near the middle of its range this month.

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The onshore yuan eased to a one-week low against the dollar after the PBOC unexpectedly cut key interest rates. It weakened to a low of 6.7620 per dollar, compared with the previous close of 6.7430.

New Zealand’s kiwi slumped 0.35 percent to $0.6433, pulling away from Friday’s high at $0.6468, the strongest level since June 8.

The Australian dollar slid 0.27 percent to $0.7102, falling further away from the recent peak last Thursday, when it struck it highest level since June 10 at $0.7136.

Chinese industrial output, retail sales and fixed-asset investment all fell short of analyst estimates, as a nascent recovery from COVID-19 lockdowns faltered.

To support the economy, the People’s Bank of China (PBOC) unexpectedly cut a key interest rate for the second time this year and withdrew some cash from the banking system on Monday.

The PBOC said it was lowering the rate on 400 billion yuan ($59.33 billion) of one-year medium-term lending facility (MLF) loans to some financial institutions by 10 basis points (bps) to 2.75 percent, from 2.85 percent.

It also injected 2 billion yuan through seven-day reverse repos while cutting the borrowing cost by the same margin of 10 bps to 2.0 percent from 2.1 percent, according to an online statement. – Reuters

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