The US dollar demonstrated strength against the major foreign currencies today, Tuesday, August 16, 2022. This development in the foreign exchange market comes as recession worries heighten.
We want to help our followers understand the latest developments regarding the US dollar, especially those who are using this foreign currency. Therefore, we are sharing this foreign exchange-related update with them.
Based on the Tuesday, August 16, 2022 report posted online by CNA, a website delivering the latest news in Singapore and Asia, the safe-haven US dollar hovered close to a one-week high today.
Traders utilize the US dollar index or DXY as they search for a measure of the value of the greenback versus a currency basket. Trade partners of the United States use these six major peers.
The US dollar index held steady at 106.51, which is merely below the previous session’s peak of 106.55, the most robust since last week, Monday, August 8, 2022.
Meanwhile, the Australian dollar, euro, and Chinese renminbi stayed under pressure. The official currency of Australia plunged to as low as US$0.70005.
It threatened to drop below the psychological 70-cent mark for the first time since Wednesday, August 10, 2022.
The euro, which is the most heavily weighted foreign currency in the US dollar index, was little modified at US$1.0158.
This event happened after it dipped to the weakest since Friday, August 5, 2022 at US$1.0154. The US dollar rose 0.07 percent to 6.8174 Chinese yuan.
This action of the greenback against the offshore renminbi involved itself heading back toward Monday’s high of 6.8200 Chinese yuan, which is a level last seen in mid-May.
These happenings in the foreign exchange market occurred as weak international economic data reignited recession paranoias. A raft of flimsy world economic indicators drove the international safety bid.
Data today indicated New York state factory activity and US single-family homebuilders’ confidence fell this month to their lowest levels since close to the beginning of the COVID-19 pandemic.
These details followed surprisingly weak Chinese activity data. It spanned fixed-asset investment, industrial output, and retail sales as a nascent recuperation from draconian COVID-19 lockdowns faltered.
Joseph Capurso wrote a note to clients. He pointed out that the weakness in the Chinese and US economies is usually a bad sign for commodity currencies, which comprise the Australian dollar and the New Zealand dollar.
The Commonwealth Bank of Australia strategist cited that the path of least resistance for the New Zealand dollar is lower until tomorrow’s policy meeting of the Reserve Bank of New Zealand.
We understand that users of the US dollar may be rejoicing as the safe-haven currency has gained strength lately. However, this development comes amid increased recession worries.
We recommend our readers, who are US dollar users, to spend their money wisely. If they are overseas, we understand they can get more value from their money.
Nevertheless, with a global recession rearing its ugly head, we also suggest saving some money.
In this manner, money will not be a huge problem for consumers if the world enters a recession sometime this year or early next year.