Federal Reserve's Jackson Hole symposium for a guide on where rates might settle when the dust of this hiking cycle clears. The dollar made a gain of 0.7% on the euro last week, inched ahead on the yen and surged by more than 1% on the Antipodean currencies as U.S. Treasury yields leapt in anticipation of interest rates staying higher for longer.
In early trade, the Australian dollar, at $0.6402, and the New Zealand dollar at $0.5913 were slightly lower and uncomfortably close to last week's nine-month lows after a rate cut in China disappointed market expectations. China cut its one-year benchmark lending rate by 10 basis points and left its five-year rate unchanged, against economists' expectations for 15 bp cuts to both. The yuan slid to the weak side of 7.3 per dollar despite a firm fixing of its trading range by the central bank.
It last traded at 7.3011, though so far keeping off last week's lows beyond 7.31, as that had brought state banks into spot markets in London and New York hours as buyers. The Antipodean currencies often function as a liquid proxy for the yuan owing to the region's exports to China. «The Australian dollar will continue to underperform this week in our view,» said strategists at the Commonwealth Bank of Australia in a note to clients.
«We consider there is a growing risk that the Aussie dips below $0.60 before year-end. It will likely take a big Chinese stimulus package focused on commodity-intensive infrastructure spending to turn around the downtrend.» Like the yuan, the yen is also on intervention-watch, having fallen to levels around which authorities stepped in last year. It was steady at 145.19 per dollar in early trade.
The euro held at $1.0871. Sterling hovered at $1.2738. The Swiss
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