The dollar extended gains in Monday’s early trading in Asia as a public holiday in Japan reduced liquidity, leaving China’s somewhat disappointing weekend stimulus announcements the center of market attention .
The euro fell 0.13% to $1.0922 and the pound fell almost 0.2% to $1.3043. The dollar remained stable against the Japanese yen at 149.20.
The dollar index was at 103.10, up slightly and nearing last week’s peak, its highest since mid-August, as bets on further rate cuts from the Federal Reserve narrowed during its last meetings this year.
Before the land market opened, the yuan was down more than 0.2% against the dollar, while the Australian dollar, whose fortunes are closely linked to those of China, was down 0.16 % at $0.67385.
China said on Saturday it would “significantly increase” public debt issuance to provide subsidies for low-income people, support the real estate market and replenish the capital of state banks, as that it strives to revive economic growth which is running out of steam.
Without providing details on the scale of fiscal stimulus measures in the pipeline, Finance Minister Lan Foan told a news conference there would be more “counter-cyclical measures” this year.
“Markets are likely disappointed that China’s Finance Ministry has not unveiled concrete additional stimulus measures,” Richard Franulovich, head of foreign exchange strategy at Westpac, said in a note.
“The weekend press briefing only reinforces our existing expectations that China’s policy shift is worth a one-off 3-4 cent increase in the Australian dollar balance, about half of which has already been priced in in prices.
He said further action is unlikely until progress is made in addressing the problems of excess housing, local government debt and the demographic challenges posed by the aging of the Chinese population.
The yuan is down 0.9% against the dollar since September 24, when the People’s Bank of China kicked off the most aggressive stimulus measures since the pandemic.
The CSI300 index broke records in terms of daily movements and is up 16% overall. However, stocks have faltered in recent sessions as initial enthusiasm over economic stimulus measures gave way to concerns about whether policy support would be enough to revive growth.
“It may take more time to take more considered and targeted actions,” said Christopher Wong, a currency strategist at OCBC in Singapore. “But these measures must also be taken quickly, because markets are eagerly awaiting them. Excessive expectations versus underdelivery would lead to disappointment…”
Currency movements in major markets were tepid last week. The yen and euro fell about 0.3% each, the pound sterling lost 0.4% and the dollar index rose 0.4%.
U.S. Treasuries are unlikely to set the pace on Monday, as the Japanese and U.S. markets are closed for holidays.
Last week’s U.S. data, which showed slightly higher-than-expected consumer inflation but also an increase in weekly jobless claims, did not change expectations that the Fed will cut its rates by 25 basis points in November and December.
Next up for traders are retail sales and jobless claims in the United States on Thursday.
Fed Governor Christopher Waller will speak later Monday. He is one of the proponents of cutting rates further, as he now fears the pace of price increases may be below the Fed’s target.
The New Zealand dollar was down 0.15% at $0.61, following last week’s 0.8% decline following the central bank’s half-point interest rate cut and the announcement of other reductions to come.
Singapore’s central bank maintained its currency-based monetary policy on Monday.
Related News :