SINGAPORE- The dollar began the week on the back foot, following its first weekly loss in nearly two months, as investors cut bets on further dollar gains from rising US rates and turned hopeful that loosening lockdowns in China can help global growth.
US stock market futures bounced sharply in early Asia trade and pulled the risk-sensitive Australian and New Zealand dollars along for the ride.
The Aussie was last up 0.4 percent at $0.7080 and has lifted 3.8 percent in a week and a half. The kiwi rose 0.6 percent to $0.6450, a three-week high.
“It’s a reasonably positive start to the week,” said National Australia Bank’s head of foreign exchange strategy, Ray Attrill.
“We did have a sharp reversal of US equity market weakness in the last hour or so on Friday, so maybe there’s some momentum there,” he added. “The US dollar looks, for the time being, to be losing upside momentum.”
The euro and yen rose, with the yen up 0.1 percent to 127.83 per dollar and the euro up 0.2 percent at $1.0586 following last week’s 1.5 percent gain on the dollar.
The US dollar index fell 0.1 percent to 102.790, about 2 percent beneath a two-decade high of 105.010 made earlier in May.
“The dollar may be carving out a peak, given Europe’s resilience to the energy shock and potential easing of lockdowns in China,” said Commonwealth Bank of Australia strategist Joe Capurso.
“Given the type of policy support, we expect investment to rebound faster than consumer spending,” he said. “Investment is mining commodity-intensive (and therefore) very positive for commodity currencies such as the Australian dollar and Canadian dollar, in addition to the yuan.”
Shanghai is edging out of lockdown and an unexpectedly big rate cut in China last week has been taken a signal that authorities are going to provide support to a recovery.
