LONDON risk Risk-sensitive Australian dollars have risen as risk-averse risk of a massive infection of the risk-averse China Evergrand Group has receded, and the safe-haven yen fell to a three-month low on Monday.
Rising commodity prices also helped the Aussie and Norway crowns, while the yen was under pressure as higher U.S. production attracted money from Japanese investors.
The euro traded at 17 1.17205, which ignored the progress of the German election over the weekend, with the Social Democrats predicting a brief defeat of the CDU / CSU conservative bloc.
The dollar index, which measures the U.S. currency against six major rivals, traded slightly higher at slightly..0 in the middle of its range last week.
“This seems to be a continuation of last week, the high-beta is performing well, lagging behind the pack, the FX market really follows the improvement in the sentiment that we saw more broadly – stocks run a two-week losing run, and yields are rising quite fast.” Michael Brown, senior market analyst at Caxton FX, said.
U.S. production has peaked since the beginning of July in anticipation of tougher U.S. monetary policy following the Federal Reserve’s announcement last week, and it could begin to slow down as soon as November and follow interest rate hikes faster than expected.
Analysts at the Commonwealth Bank of Australia wrote in a client note, “The US dollar will likely be caught in the cross-flow of more hockey FOMCs and the risk of a potential evergreen default will fade.”
“Still, the risks are leaning towards a stronger US dollar,” he said, adding that any new Evergrand concerns are unlikely to trigger last week’s level of market volatility.
Concerns that Evergrand, China’s second-largest developer, could default on its ৫ 505 billion default have overshadowed trade in recent weeks, but some fears of that transition have lessened.
The yen weakened to 110.81 against the dollar, matching the July 7 low, before strengthening slightly at 110.645 at the end of last week.
It follows the benchmark measures of the 10-year U.S. Treasury yield, which touched 1.4660 percent on Monday’s second day, the highest since July 2, before returning to 1.4527 percent.
“The correlation between U.S. bond yields and USDJPY has increased,” Chris Weston, head of research at Melbourne-based broker Pepperstone, wrote in a client note.
“USDJPY seems to be expanding a bit, so I’ll be careful to chase here, but I’ll look for a re-test of 110.50 as a potential support zone in a rising bullish trend.”
Aussie rose 0.37 percent to 7 0.72835 from 7 0.72205 a week earlier, the lowest since August 24.
The Norwegian crown gained about 0.4 percent and touched .5.549 ched per dollar for the first time since July.
The Canadian dollar added about 0.3 percent to C $ 1.2622 per greenback.
These gains came as Brent crude advanced for a fifth day, closing at $ 80 a barrel, boosting iron ore, copper and other industrial metals.
Central bank speakers will be in focus this week, with Fed Chair Jerome Powell joining Treasury Secretary Janet Yellen to speak in Congress on Tuesday.
The European Central Bank hosts an annual forum on Tuesday and Wednesday, where not only ECB President Christine Lagarde will speak on the first day, but Bailey will join panel discussions with Powell, Bank of Japan Governor Haruhiko Kuroda and Bank of England Governor Andrew.
($ 1 = 6.4662 Chinese Yuan Renminbi)
Written by Twick Carvalho
This News Originally From – The Epoch Times