Dollar drifts toward monthly loss as Fed bets ease

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SINGAPORE — The dollar nursed last week’s

losses on Monday and was headed for its first monthly drop in

five months as investors have scaled back bets that rising U.S.

rates will spur further gains and as fears of a global recession

have receded a little.

The week ahead is full of data that could provide clues on

the outlook for global growth, U.S. interest rates and the

dollar with Chinese Purchasing Managers’ Index figures, U.S.

jobs numbers and growth data in resource bellwether Australia.

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Trade was likely to be lightened through Monday as U.S.

stock and bond markets close for the Memorial Day public

holiday.

Early in the Asia session the dollar was a fraction weaker

on the euro at $1.0728, just above a five-week low,

having dropped about 1.5% on the common currency last week.

The risk-sensitive Australian and New Zealand dollars were

firm after a Friday rally, while the yen was a

fraction weaker at 127.28 per dollar.

The Aussie hovered near a three-week high at

$0.7161, as did the kiwi at $0.6536.

“The dollar can fall further this week. Were it not for

China’s lockdown, the global outlook would be brighter, and the

dollar lower,” said Joe Capurso, head of international economics

at the Commonwealth Bank of Australia in Sydney.

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The dollar index, which hit a two-decade high of

105.010 earlier in May was steady at 101.660 on Monday. Sterling

held last week’s gains at $1.2628.

China’s yuan held steady at 6.7210 per dollar in

offshore trade, buoyed by progress out of virus lockdowns.

Shanghai said on Sunday “unreasonable” curbs on businesses

will be removed from June 1, while Beijing reopened parts of its

public transport as well as some malls.

Most analysts are wary of calling an outright end to the

recent dollar strength.

But positive U.S. consumer data and the easing lockdowns in

China is helping kindle hopes about global growth, which tends

to support exporters’ currencies at the dollar’s expense.

Investors have also seized on hints the Federal Reserve,

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once it has hiked aggressively over the next two months, might

then take a breather.

“The Fed has stopped short of validating calls for even more

tightening, leading to a plateau in forward expectations,” said

NatWest Markets’ global head of desk strategy, John Briggs.

Cryptocurrencies remain on the back foot and bitcoin

has struggled to recoup losses made during a broad

sell-off of risk assets at the start of the month. It last

bought $29,333.

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Currency bid prices at 0036 GMT

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

Previous Change

Session

Euro/Dollar $1.0732 $1.0736 -0.03% -5.59% +1.0740 +1.0727

Dollar/Yen 127.2100 127.1000 +0.20% +10.72% +127.3300 +127.3500

Euro/Yen

Dollar/Swiss 0.9578 0.9574 +0.04% +5.00% +0.9583 +0.9571

Sterling/Dollar 1.2624 1.2628 +0.00% -6.62% +1.2634 +1.2625

Dollar/Canadian 1.2720 1.2722 -0.03% +0.59% +1.2728 +1.2715

Aussie/Dollar 0.7162 0.7160 +0.07% -1.43% +0.7166 +0.7149

NZ 0.6534 0.6539 -0.07% -4.54% +0.6540 +0.6524

Dollar/Dollar

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

(Reporting by Tom Westbrook)