The dollar gave back half of its gains this year

In global markets, the dollar has given back more than half of its gains this year on expectations that the Fed will end its aggressive rate hikes and optimism about the Chinese economy’s reopening plan. The Bloomberg Dollar Spot Index gave back some of its 16 percent increase in 2022 and is up 7 percent since the beginning of the year. The slower-than-expected inflation in the U.S. and Fed Chair Jerome Powell’s statements signaling that the pace of interest rate hikes will slow were effective in giving back some of the dollar’s gains. The Bloomberg Dollar Spot Index fell 0.4 percent in the Asian session this morning, falling to its lowest level since June 28. The index fell for a fifth day, entering its longest downtrend since April 2021. The easing of some COVID restrictions in Shanghai and Hangzhou in China, the world’s second-largest economy, also played a role in the dollar’s decline. “The prospect of a reopening of the Chinese economy and the feed policy are the main themes supporting commodity currencies. The stronger-than-expected nonfarm payrolls data on Friday only caused a reactionary bounce in the dollar,” said Christopher Wong, currency strategist at Overseas Chinese Banking Group in Singapore.