Dollar firm after Chinese growth hits 28-year low

The greenback has enjoyed its first weekly gain since mid-December — Reuters pic
The greenback has enjoyed its first weekly gain since mid-December — Reuters pic

LONDON, Jan 21 —The dollar held near a two-week high today, shrugging off concerns about weakening and data showing ’s economy slowed sharply in 2018.

The greenback has enjoyed its first weekly gain since mid-December, buoyed by hopes for a thaw in US-China trade tensions and stronger-than-expected US industrial production numbers.

Going into 2019, weakness in the dollar was a consensus view among currency market traders. The bet was that the US would stop raising interest rates and the economy would slow after a fiscal boost last year.

The dollar index, which measures its strength against a group of six major currencies, on today was steady at 96.308 after climbing to 96.260 per cent on Friday, its strongest since Jan. 4.

“The is currently benefitting from its role as safe currency haven,” said Esther Maria Reichelt, an FX strategist at Commerzbank in Frankfurt

“The Federal Reserve could cushion a weaker economy with monetary policy measures… protecting the US quite well from weakening global growth and making the dollar the currency of choice,” she added.

US-China trade friction has put pressure on China’s economy, with the latest data showing the world’s second-biggest economy slowing further in the last quarter of 2018. Markets appeared to take the outcome, largely in line with expectations, in their stride.

The euro nudged up 0.2 per cent to US$1.1376 (RM4.68)  and was headed for its first daily gain in over a week but remained in close reach of a two-week low of US$1.1353 brushed on Friday.

The pound was 0.1 per cent lower at US$1.2860.

British Prime Minister Theresa May will on Monday put forward a motion on her proposed next steps. Over the following week, lawmakers will be able to propose alternatives. They will debate these plans on Jan. 29, and voting on them should indicate whether any could get majority support.

The Australian dollar was steady at US$0.7166 after ending Friday on a loss of 0.3 per cent.

The Aussie was largely unfazed by China’s growth numbers though analysts agree that any sharp drop in demand from its biggest trading partner would put a dent in local assets.

The US financial markets will be closed today for Martin Luther King Jr. Day. — Reuters

Source: The Malay Mail Online

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