May 23, 2022 01:26AM ET
By: AnalysisWatch
The dollar slipped on Monday as investors kept up the selling pressure, cutting bets on further dollar gains due to the US rate hike, while hopes that easing restrictions in China would help global growth and exporters' currencies.
US equity futures rebounded sharply in the Asian session and dragged along the region's risk-sensitive currencies, even as Asian equity markets faltered.
The euro and yen rose, with the Japanese currency up 0.4 per cent to $127.35 and the euro up 0.2 per cent to $1.0586, following last week's 1.5 per cent gain against the dollar.
The US dollar index, up about 16 percent to a two-decade high in the 12 months to mid-May, fell 0.23 percent to 102.680 and lost about 2 percent in a week.
The Swiss franc, a safe haven asset, also rose, maintaining last week's strong gains - the best since March 2020 - when it rose from parity with the dollar to around 0.9716 per dollar.
CHINESE HOPE
Shanghai is coming out of the doldrums and an unexpectedly large rate cut last week in China was seen as a sign that the authorities intend to support the recovery.
The city of 25 million inhabitants plans to lift the lockdown and return to a more normal life as of 1 June.
Last week, the yuan experienced its best week since late 2020 and stabilized at 6.6844 per dollar on Monday.
The Canadian dollar rose for the third consecutive week last week and was up about 0.4 per cent at $1.2800 per dollar on Monday.
The pound jumped nearly 2% last week on the back of stronger-than-expected retail data and markets' broader second thoughts about whether global central banks are really lagging behind the Federal Reserve. The latest rise was 0.4% to $1.2546.
Australia elected a new government on Saturday, although market reaction was muted as polls had predicted a victory for the Centre-left Labor Party and no change in the direction or pace of interest rate rises is expected.
The Reserve Bank of New Zealand is expected to raise its benchmark rate by 50 basis points on Wednesday. The minutes of the US Federal Reserve meeting are also expected on Wednesday.