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LIVE ANALYSIS

Dollar firm as China Evergrande nerves resurface By Reuters

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© Reuters. FILE PHOTO: An employee counts U.S. dollar bills at a money exchange in central Cairo, Egypt, March 20, 2019. REUTERS/Mohamed Abd El Ghany./File Photo
By Tom Westbrook

SINGAPORE (Reuters) – The dollar found support just below last week’s peaks on Monday as renewed concerns about China’s property sector and looming U.S. labour data put investors in a cautious mood.

The greenback scaled a 14-month high on the euro and a 19-month top on the yen last week as markets reckoned U.S. interest rates could rise ahead of global peers.

Shares in embattled developer China Evergrande were halted in Hong Kong without any immediate reason, rekindling market nerves about the possibility of global contagion – or at least distress in China’s property sector.

The euro dipped back below $1.16 and at $1.1595 is not far from last week’s trough at $1.1563. The yen edged higher to 110.99 per dollar. Sterling, the and all eased a fraction and the fell 0.3%.

Investors are concerned that a collapse at Evergrande could hurt an already fragile Chinese economy and drag on global growth. The rose 0.1% to 94.049. The Australian dollar was down 0.2% to $0.7257 and the kiwi was off 0.1% at $0.6932. [AUD/]

“(There’s) a bit of nervousness,” said Moh Siong Sim, currency analyst at the Bank of Singapore, even if most traders still think Evergrande’s systemic risk can be contained.

“It’s part of the wall of worry,” he said, which the market could eventually “climb” if the COVID backdrop improves, growth stabilises and inflation concerns subside, but which for now is keeping investor sentiment fairly dour.

Besides Evergrande a Friday CNBC report which said U.S. Trade Representative Katherine Tai will announce on Monday that China is not complying with U.S.-China trade rules also provided support to the dollar, especially against the yuan.

Chinese markets were closed for a holiday.

In the week ahead, the Reserve Bank of Australia meets on Tuesday and is expected to keep policy steady. Across the Tasman, a 25 basis point hike from the Reserve Bank of New Zealand on Wednesday is priced in.

And on Friday, U.S. labour data is expected to show continued improvement in the job market, with a forecast for 460,000 jobs to have been added in September – enough to keep the Federal Reserve on course to begin tapering before year’s end.

“The question is whether there is a number that alters the Fed’s view on tapering its bond purchases in November, and what a really weak or hot number means amid the backdrop of rising stagflation fears,” said Pepperstone’s head of research, Chris Weston.

“If U.S. treasuries find further buyers this week into Friday’s U.S. non-farm payrolls, the dollar may go on sale this week.”

Elsewhere economists polled by Reuters expect the cash rate on hold in Australia until at least 2024, as the RBA has been insisting it will be.

Swaps markets show a 97% probability of a rate hike in New Zealand on Wednesday and a 96% chance of another one in November.

Sterling, meanwhile, despite Friday gains, is still nursing losses from a sharp drawdown last week when traders shrugged off hawkish central bank rhetoric to focus on a sour outlook and the risk of both higher rates and inflation.

“Investors are judging the UK by its whole suite of fundamentals factors and movements in sterling suggest that many are not liking what they are seeing,” said Rabobank strategist Jane Foley, as the currency erases early 2021 gains.

“The UK no longer has an advantage on the vaccine front…and, while PM (Boris) Johnson likes to view Brexit as ‘done’, many businesses and commentators are only just starting to evaluate its impact.”

Sterling last bought $1.1353.

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Currency bid prices at 0222 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar

$1.1597 $1.1594 +0.03% -5.07% +1.1614 +1.1590

Dollar/Yen

111.0400 111.0300 -0.01% +7.48% +111.0450 +110.9300

Euro/Yen

128.75 128.75 +0.00% +1.44% +128.8600 +128.6800

Dollar/Swiss

0.9304 0.9307 -0.05% +5.14% +0.9307 +0.9293

Sterling/Dollar

1.3534 1.3543 -0.05% -0.92% +1.3577 +1.3535

Dollar/Canadian

1.2642 1.2643 -0.02% -0.73% +1.2654 +1.2614

Aussie/Dollar

0.7257 0.7268 -0.14% -5.65% +0.7283 +0.7250

NZ

Dollar/Dollar 0.6932 0.6943 -0.14% -3.45% +0.6952 +0.6927

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

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Daily Market Analysis

黄金交易提醒:美联储决议来袭,警惕多空双杀!

周三(2月1日)亚市盘初,现货黄金窄幅震荡,目前交投于1927美元/盎司附近。隔夜金价探底回升,虽然上周出炉的美国四季度GDP数据增强了鹰派预期,再加上月末仓位调整因素,美元指数周二一度反弹至近两周高位附近,金价则一度跌至1900整数关口附近,但美国第四季劳动力成本增幅低于预期,令鸽派预期有所回升,吸引逢低涌入金市,帮助金价扭跌为涨,收盘交投于1928美元/盎司附近。 本交易日市场目光将聚集美联储利率决议,市场普遍预期美联储将加息25个基点,但对于美联储的鹰鸽态度还存在一定的分歧。一方面,美联储可能强化将利率较长时间维持在5%以上,以更好的控制通胀水平,但另一方面,市场怀疑美联储可能会向外界传递将在5月份中止加息的信号。

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