Breaking News
Investing Pro 0
💎 Access the Market Tools Trusted by Thousands of Investors Get Started

Safe haven dollar edges higher after weak Chinese trade data

Published Jun 07, 2023 09:20
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
EUR/USD
-0.09%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
GBP/USD
-0.44%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AUD/USD
+0.38%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
USD/CAD
-0.01%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
USD/CNY
-0.11%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DXY
+0.21%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

Investing.com - The U.S. dollar edged higher in early European trade Wednesday, as traders sought out this safe haven after disappointing Chinese trade data hit sentiment.

At 03:05 ET (07:05 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 104.162, not far removed from the 2½-month peak of 104.70 seen at the end of May.

China's trade surplus sank to a 13-month low in May, according to data released earlier Wednesday, driven chiefly by a surprise drop in exports as foreign demand for Chinese goods dried up. 

The slump in exports is indicative of slowing economic growth in Europe and the U.S., China’s primary markets for locally produced goods, and this has boosted demand for the dollar, a safe haven in times of stress.

The dollar has also benefited from the turmoil in the cryptocurrency markets, following the crackdown by the Securities and Exchange Commission on the crypto industry.

Gains are limited though as traders await next week’s Federal Reserve policy-setting meeting amid uncertainty of its next move.

Money markets are pricing in a roughly 19% chance that the U.S. central bank will raise rates by 25 basis points next week, compared to an over 60% chance a week ago, according to the CME FedWatch tool, after weak U.S. services activity data.

That said, the decision of the Reserve Bank of Australia to raise its cash target rate by 25 basis points on Tuesday, citing still high inflation, does create the possibility of an upside surprise. 

It also puts the focus on the Bank of Canada’s meeting later this session amid speculation that it too could resume rate hikes, following recent sticky inflation data.

“A 25bp BoC rate hike … (now priced with a 43% probability) would probably cause ripples across core bond markets around the world and could keep the dollar bid on the view that the Fed might be closer to hiking than first thought,” said analysts at ING, in a note.

AUD/USD fell 0.1% to 0.6667, with the Aussie dollar handing back some of the previous session's 0.8% gain, USD/CNY rose 0.1% to 7.1267, while USD/CAD rose 0.1% to 1.3420.

Elsewhere, EUR/USD fell 0.2% to 1.0676 after data showed that German industrial production rose slightly less than expected in April, increasing by 0.3% on the previous month, compared with the expected increase of 0.6%.

The European Central Bank also meets next week and is widely expected to continue hiking interest rates with inflation remaining well above the central bank’s 2.0% target.

The ECB hasn’t finished increasing borrowing costs as core inflation proves stubborn, Executive Board member Isabel Schnabel said in an interview with De Tijd.

“We have more ground to cover,” she was quoted as saying in the newspaper. “It will depend on the incoming data by how much more rates will have to increase.”

GBP/USD fell 0.2% to 1.2405 after data from mortgage lender Halifax indicated that British house prices dropped on an annual basis in May for the first time in 11 years.

Safe haven dollar edges higher after weak Chinese trade data
 

Related Articles

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