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Title: Dollar bounces as Snapchat sours mood; Aussie, kiwi sink



May 24, 2022 01:31AM ET


By: AnalysisWatch


The dollar, considered a safe haven, recouped some of its overnight losses on Tuesday and the yen also gained as US stock futures fell after a profit warning from Snapchat, dampening sentiment after Wall Street's strong start to the week.


The dollar index, which measures the currency against six other major currencies, gained 0.1 per cent to 102.24, recovering after retreating 0.85 per cent from a nearly two-decade high above 105 reached mid-month on Monday.


The dollar, however, weakened against the yen, its main currency of refuge, falling 0.2 per cent to 127.655 yen.


US stock futures pointed to a 0.92% drop for the S&P 500 and a 1.53% drop for the Nasdaq on the fresh start, clouding a strong session on Monday in which the indexes had risen 1.86% and 1.68% respectively.


Traders pointed to a profit warning from Snapchat owner Snap (NYSE:SNAP) that sent the stock plunging 28% in extended trading.


Despite Tuesday's respite, the US currency fell across the board while Treasury yields retreated from multi-year highs as aggressive easing by the Federal Reserve is already priced in.


Meanwhile, positive signs for the global economy, such as Shanghai's expected breakout from weeks of crippling COVID-19 freezes and US President Joe Biden's comments this week towards a possible easing of the trade war with China, have improved sentiment at the expense of the dollar.


The release of global manufacturing purchasing managers' indices later on Tuesday will be another important topic for forex traders.


The risk-sensitive Aussie dollar fell 0.41% to $0.70815, while the New Zealand kiwi slipped 0.46% to $0.6438, a day before the Reserve Bank of New Zealand is widely expected to raise interest rates by half a point.


The Antipodean currencies rose 0.83% and 0.91% on Monday.


Westpac expects the kiwi could top $0.69 by the end of the year on a rally fuelled by both a drop in expectations of Fed tightening and optimism about a renewed opening in China.


The euro slipped 0.22% to $1.0667 but did little to stem Monday's 1.17% rise as European Central Bank President Christine Lagarde said policymakers are likely to raise the euro area deposit rate out of negative territory by the end of September.


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