FOREX-Dollar jumps on China growth fears, yen rebounds ahead of BOJ meeting

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Band Karen Brettell

NEW YORK, April 26 (Reuters)The dollar hit a two-year high on Tuesday as worries about slowing growth in China and expectations that the Federal Reserve will aggressively raise rates boosted demand for the greenback.

The Japanese yen also rebounded as investors speculated that the central bank or the Japanese government could act to stabilize the currency, which hit a 20-year low against the dollar last week.

Concerns about China’s growth have grown as the Shanghai financial hub was under a strict lockdown to fight COVID-19 for about a month.

Overnight, Beijing also ramped up plans for mass testing of 20 million people and fueling concerns about an impending lockdown.

This “adds fuel to the fire that makes the dollar strong,” said Erik Nelson, macro strategist at Wells Fargo in New York.

The Wall Street Journal also reported on Tuesday that Chinese President Xi Jinping told officials he wants China’s economic growth to outpace that of the United States this year.

It may be slower than expected. Last month, China was aiming for economic growth of around 5.5% this year.

“The consensus for US GDP growth this year is just over 3%, so that’s a huge, huge downgrade in terms of the growth target,” Nelson said.

The dollar index against a basket of currencies =USD was last up 0.61% at 102.30, the highest since March 2020.

The offshore yuan CNH=D3 just below a 17-month low hit on Monday after China’s central bank eased currency holding requirements for banks in a bid to stem the currency’s slide.

euro EUR=EBS fell 0.63% to $1.0644, the lowest since March 2020.

The single currency has been hit by the economic impact of the war in Ukraine and expectations that the European Central Bank will move more slowly than the Fed in raising interest rates.

The euro added to losses after it was reported that deliveries of Russian gas under the Yamal contract to Poland were halted.

The US central bank is expected to raise rates by 50 basis points at its meeting next week and then again in June and July. Fed funds futures traders expect the Fed’s benchmark rate to hit 2.69% by the end of the year, up from 0.33% today. FEDWATCH

The dollar fell 0.39% against the Japanese yen JPY=EBSon what appeared to be short cover before the Bank of Japan wrapped up its two-day meeting on Thursday.

“There is a shift in sentiment and some concern in the market that officials are worried about weakness and may take some action,” said Neil Jones, head of currency sales, Financial Institutions at Mizuho in London.

Investors will be watching if the BOJ makes any changes to its yield curve control policy.

Japanese Prime Minister Fumio Kishida on Tuesday urged the central bank to maintain its ultra-loose monetary policy, ruling out the idea of ​​using interest rate hikes to prevent further declines in the yen.

The British pound GBP=D3 fell 1.20% to $1.2586, the lowest since July 2020.

Bitcoin BTC=BTSP fell 5.48% to $38,226+ ETH=BTSP fell 5.68% to $2,835.

================================================= =====

Currency prices at 3:09 p.m. (7:09 p.m. GMT)

The description

RIC

Last

Closing of the previous session

Percentage change

Percentage change since the beginning of the year

High bid

Low bid

dollar index

=USD

102.3000

101.7000

+0.61%

6.938%

+102.3300

+101.5000

euro dollar

EUR=EBS

$1.0644

$1.0713

-0.63%

-6.36%

+$1.0738

+$1.0641

dollar/yen

JPY=D3

127.6050

128.0850

-0.39%

+10.93%

+128.1950

+127.0400

Euro/Yen

EURJPY=

135.83

137.24

-1.03%

+4.23%

+137.5300

+135.4100

Dollar/Swiss

CHF=EBS

0.9624

0.9596

+0.30%

+5.51%

+0.9624

+0.9565

British pound/dollar

GBP=D3

$1.2586

$1.2740

-1.20%

-6.92%

+$1.2772

+$1.2585

Canadian dollar

CAD=D3

1.2806

1.2738

+0.55%

+1.29%

+1.2828

+1.2685

Australian/Dollar

AUD=D3

$0.7139

$0.7180

-0.55%

-1.77%

+$0.7229

+$0.7140

Euro/Switzerland

EURCHF=

1.0242

1.0276

-0.33%

-1.22%

+1.0290

+1.0212

Euro/pound sterling

EURGBP=

0.8455

0.8408

+0.56%

+0.65%

+0.8459

+0.8394

New Zealand Dollar/Dollar

USD=D3

$0.6575

$0.6622

-0.66%

-3.89%

+$0.6645

+$0.6578

Dollar/Norway

NOK=D3

9.2350

9.1230

+1.23%

+4.83%

+9.2390

+9.0800

Euro/Norway

EURNOK=

9.8320

9.7685

+0.65%

-1.81%

+9.8458

+9.7433

Dollar/Sweden

SEK=

9.8260

9.7070

+0.55%

+8.96%

+9.8384

+9.6881

Euro/Sweden

EUREK=

10.4594

10.4017

+0.55%

+2.20%

+10.4760

+10.3754

(Additional reporting by Tommy Wilkes and Dhara Ranasinghe in London; Editing by Emelia Sithole-Matarise and Ken Ferris)

((karen.brettell@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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