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The dollar is heading for a monthly loss, with the US Federal Reserve possibly ending the cycle of raising interest rates after increasing them by 25 basis points, last week.
On Monday, the dollar index rose 0.22% in the latest transactions to 101.82 points, but it is heading for a monthly decline of about 1%, to increase its loss for the second month in a row.
The euro fell 0.05% to $1.10065, but is on track for a monthly gain of about 1%.
Yen backed off
The yen fell, extending losses from a volatile session at the end of last week, after the Bank of Japan loosened its grip on interest rates, although it appeared to be heading for its first monthly increase since March at the end of July.
The yen fell by 0.5% to 141.92 against the dollar in Asian trading, but it appears to achieve gains of more than 1.5% by the end of the month.
manufacturing activity in China
Data on Monday showed that manufacturing activity in China declined for the fourth consecutive month in July, but news of further measures to stimulate the country’s faltering economic recovery lifted morale.
The Japanese currency fell sharply, on Friday, as traders tried to determine the implications of the Bank of Japan’s move to maintain ultra-low interest rates, make its policy to control the yield curve more flexible, and soften its defense of setting a long-term ceiling for interest rates at the end of its meeting on monetary policy.
At the end of Friday’s session, the dollar rose 1.2% against the yen, after falling 1% to its lowest level during the session at 138.05 yen.
The yuan rose slightly in transactions outside China, and recorded in the latest transactions 7.1495 against the dollar, after receiving some support from an announcement by the Chinese State Council, on Monday, to take measures to restore and increase consumption in the sectors of cars, real estate and services.
China’s largest cities, including Beijing and Shenzhen, said they would “take measures to better meet the needs of homebuyers”, but without giving details.
The rise of the Australian dollar
The Australian and New Zealand dollars rose thanks to the improvement in sentiment. The Australian dollar increased 0.5% to $0.6681, and the New Zealand dollar rose 0.7% to $0.61955.
Sterling rose slightly to $1.2850, ahead of the Bank of England’s monetary policy meeting this week, as it is expected to raise interest rates by a quarter of a percentage point. (Reuters)
