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© Reuters
By Peter Nurse
Investing.com – The US dollar gained positions at the start of trading on Monday in Europe, as fears that the escalating COVID situation in China would slow down the global economic recovery prompted safe-haven flows.
By 09:05 AM ET (0905 GMT), the , which tracks the currency against a basket of six other major currencies, was up 0.5% at 107.365, near its highest level since November 11. .
Several Chinese cities have seen record spikes in new Covid-19 cases over the weekend, with the country suffering its first Covid-related death in nearly six months on Saturday and another two on Sunday.
The increase in infections has led to the imposition of new containment measures in several financial centers, including the capital, Beijing, and the economic center, Shanghai, which has raised fears that the economic activity of the second largest economy in the world and main regional growth engine is severely hampered.
The pair rises 0.6% to the 7.1643 level, and the yuan has hit a 10-day low.
However, despite this rise in the dollar, Goldman Sachs believes that the strengthening of the dollar against Asian currencies could now be short-lived.
“The moment when the dollar will top is not easy to determine, but in general, the dollar will peak when we have more clarity on the Federal Reserve interest rates, in 3-6 months,” the analysts wrote. Goldman in a note Sunday.
The Federal Reserve will release minutes from its November meeting on Wednesday, which could provide further clues as to whether policymakers are considering slowing down the tightening process.
The pair is down 0.5% to the 1.0272 level, near its lowest level since November 14, after the prices fell unexpectedly in October, down 4.2% for the month as a whole. , against expectations of a rise of 0.9%.
On a , prices rose 34.5%, versus 41.5% expected.
While this is good news, the rate soared above 10% on a yearly basis at the end of last month, up from 9.9% in September, prompting European Central Bank President Christine Lagarde to hint at new on Friday.
The pair is down 0.5% to 1.1826, the is up 0.3% to 140.80, while the risk-sensitive , is down 0.5% at 0.6637.
The OECD will publish its latest global economic forecasts on Tuesday, which offer a snapshot of the global economic outlook.
The group’s latest forecasts, made in September, already pointed to a deterioration in the outlook for next year, with the forecast that the US economy would enter a recession.
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