FOREX Dollar firm vs Aussie, euro on heightened recession concerns

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Australian dollars are seen in an illustration photo February 8, 2018. REUTERS/Daniel Munoz

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SINGAPORE/TOKYO/HONG KONG, Aug 16 (Reuters) – The safe-haven U.S. dollar brushed a one-week high on Tuesday as the Aussie, euro and Chinese yuan remained under pressure as the weak global economic data rekindling recession fears.

The dollar index, which measures the greenback against six major peers, was flat at 106.51, just below the previous session’s high of 106.55, the strongest since Monday last week.

The euro, the most weighted currency in the dollar index, was little changed at $1.0158 after plunging earlier to the lowest since August 5 at 1.0154.

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The pound was down 0.1% at $1.2040, the lowest since August 5.

Against the yen, a much sought-after safe haven currency, the dollar eased 0.09% to 133.19.

The global security bid was driven by a series of weak global economic indicators. Data on Monday showed U.S. single-family homebuilder confidence and New York state factory activity fell in August to their lowest levels since the start of the COVID-19 pandemic. 19. Read more

This followed surprisingly weak Chinese activity data covering industrial production, retail sales and fixed asset investment, as a nascent recovery from draconian COVID-19 lockdowns crumbled.

Against the offshore yuan, the dollar rose 0.07% to 6.8174, returning to Monday’s high of 6.8200, a level not seen since mid-May.

The Australian dollar fell to $0.70005, threatening to fall below the psychological 70 cent mark for the first time since Wednesday.

The New Zealand kiwi fell to $0.6349, also the lowest since Wednesday.

The Reserve Bank of New Zealand is expected to hike rates again by half a point on Wednesday, focusing on whether policymakers are following the Federal Reserve and Reserve Bank of Australia in taking an approach more data-driven.

“Weakness in the US and Chinese economies is generally a bad sign for commodity currencies,” including the Aussie and the kiwi, Commonwealth Bank of Australia strategist Joseph Capurso wrote in a note to clients.

“The path of least resistance for the NZD is lower until the Reserve Bank of New Zealand policy meeting tomorrow.”

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Reporting by Kevin Buckland Editing by Shri Navaratnam

Our standards: The Thomson Reuters Trust Principles.

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