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Dollar recovers last week's lost ground, hits three-week peak

08/16/2022 | 08:26am EDT

HONG KONG, Aug 16 (Reuters) - The safe-haven U.S. dollar hit a three-week high on Tuesday after weak global economic data revived concerns of a global recession.

The dollar index, which measures the greenback against six major peers, rose 0.4% to 106.94, its highest since July 27.

It has recovered all of the losses recorded last week when cooler-than-expected U.S. inflation data sent investors out of the dollar and back towards assets associated with higher risk.

Risk appetite on Tuesday was hurt by a dip in German investor sentiment, a day after China's central bank on Monday unexpectedly cut a key interest rate to try to revive credit demand and support the COVID-hit economy after weak economic data releases for July.

"The U.S. growth picture is still intact, but the overall global picture remains fragile, given concerns about China, and that has put a dampener on risk sentiment," Sim Moh Siong, currency strategist at Bank of Singapore, said.

The euro fell 0.35% to $1.0123, sterling shed 0.26% to $1.202, and the Australian dollar was down 0.25% at $0.7 having earlier retreated below that symbolic level.

Australia's close trade ties with China mean its currency is sometimes treated by traders as a liquid proxy for China's yuan.

The dollar also climbed versus the Japanese yen up 0.8% to 13.47.

The Japanese currency, which is often affected by the difference between benchmark yields in the United States and Japan rallied sharply last week on the expectation that cooler inflation would mean a less aggressive pace of Fed tightening and so lower U.S. yields.

However in recent days, several Fed policymakers have spoken of the need for continued rate hikes.

"Fed officials have no choice but to sound tough in the face of a very, very tight labour market and far too high inflation," Kit Juckes, the head of FX strategy at Societe Generale, wrote in a research note.

"It's hard to build a compelling case to sell the dollar in that world."

In crypto currencies, bitcoin was a fraction lower at $24,000. Ether was up slightly at $1,900.

(Reporting by Kevin Buckland and Alun John; Editing by Shri Navaratnam, Simon Cameron-Moore, Jan Harvey and Barbara Lewis)

© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / CANADIAN DOLLAR (AUD/CAD) 0.07% 0.88792 Delayed Quote.-3.24%
AUSTRALIAN DOLLAR / EURO (AUD/EUR) 0.08% 0.67298 Delayed Quote.5.58%
AUSTRALIAN DOLLAR / JAPANESE YEN (AUD/JPY) 0.27% 93.711 Delayed Quote.12.16%
AUSTRALIAN DOLLAR / NEW ZEALAND DOLLAR (AUD/NZD) 0.05% 1.14305 Delayed Quote.7.23%
AUSTRALIAN DOLLAR / SWISS FRANC (AUD/CHF) 0.19% 0.64333 Delayed Quote.-3.07%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.21% 0.64823 Delayed Quote.-10.04%
BITCOIN (BTC/EUR) 2.99% 19991.4 End-of-day quote.-52.44%
BITCOIN (BTC/USD) 2.31% 19244.4 End-of-day quote.-59.69%
BRITISH POUND / AUSTRALIAN DOLLAR (GBP/AUD) -0.24% 1.65983 Delayed Quote.-11.33%
BRITISH POUND / EURO (GBP/EUR) -0.14% 1.11719 Delayed Quote.-6.34%
BRITISH POUND / US DOLLAR (GBP/USD) -0.02% 1.07603 Delayed Quote.-20.22%
CANADIAN DOLLAR / AUSTRALIAN DOLLAR (CAD/AUD) -0.10% 1.126151 Delayed Quote.3.36%
CANADIAN DOLLAR / EURO (CAD/EUR) 0.00% 0.75807 Delayed Quote.9.18%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.17% 0.72998 Delayed Quote.-6.95%
DOW JONES FXCM DOLLAR INDEX -0.19% 13483.3 Real-time Quote.10.45%
EURO / AUSTRALIAN DOLLAR (EUR/AUD) -0.07% 1.48561 Delayed Quote.-5.26%
EURO / US DOLLAR (EUR/USD) 0.13% 0.96308 Delayed Quote.-15.39%
INDIAN RUPEE / AUSTRALIAN DOLLAR (INR/AUD) -0.37% 0.018908 Delayed Quote.1.89%
INDIAN RUPEE / EURO (INR/EUR) 0.44% 0.012746 Delayed Quote.7.61%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.44% 0.012253 Delayed Quote.-8.35%
MSCI SINGAPORE (GDTR) -0.93% 5370.29 Real-time Quote.-13.65%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.15% 0.56708 Delayed Quote.-16.03%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) -0.08% 7.16506 Delayed Quote.12.01%
US DOLLAR / AUSTRALIAN DOLLAR (USD/AUD) -0.22% 1.542734 Delayed Quote.11.20%
US DOLLAR / EURO (USD/EUR) -0.13% 1.038357 Delayed Quote.17.39%
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