(Bloomberg) -- The US dollar erased more than half of this year’s gains amid waning haven demand spurred by growing bets the Federal Reserve will temper its aggressive rate hikes and China’s reopening.
The Bloomberg Dollar Spot index has pared this year’s advance to about 7% after gaining as much as 16% earlier as slower-than-expected rise in consumer prices and comments by Fed Chair Jerome Powell stoked speculation the Fed will slow its pace of rate hikes next week.
The dollar gauge fell as much as 0.4% in Asian trading on Monday, hitting its lowest level since June 28 as risk-currencies rallied. The gauge is set to fall a fifth day, the longest losing streak since April 2021 after Shanghai and Hangzhou eased some Covid restrictions in a move toward reopening the world’s second-largest economy.
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“Anticipation of China reopening, Fed policy calibration are key thematics that should keep risk proxies such as commodity-linked currencies supported,” said Christopher Wong, a currency strategist at Overseas Chinese Banking Corp in Singapore. “The strong non-farm payrolls report last Friday only saw a kneejerk bounce in the US dollar.”
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