Wednesday, October 20

Dollar climbs as Evergrande uncertainty percolates


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NEW YORK — The dollar rose on Friday and was poised for its third straight week of

gains against a basket of major currencies, as uncertainty over beleaguered Chinese property developer

Evergrande helped the greenback bounce back from a sharp decline in the prior session.

China Evergrande Group owes $305 billion and has run short on cash, missing a Thursday

deadline for paying $83.5 million and leaving investors questioning whether it will make the payment before

a 30-day grace period expires. A collapse of the company could create systemic risks to China’s financial

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system.

The safe-haven dollar had its biggest one-day percentage drop in about a month on Thursday after Beijing

injected new cash into the financial system and Evergrande announced it would make interest payments on an

onshore bond, boosting risk sentiment.

The offshore Chinese yuan weakened versus the greenback at 6.4641 per dollar.

The decline came a day after the greenback was lifted by Wednesday’s announcement from the US Federal

Reserve that it will likely begin to trim its monthly bond purchases as soon as November and flagged

interest rate increases may follow suit sooner than expected as the central bank moves away from its

pandemic crisis policies.

“We are in one of the situations, and this doesn’t always happen, where the dollar is the beneficiary of

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multiple ideas,” said Joseph Trevisani, senior analyst at FXStreet.com.

“The US economy does look better than most of its competitors, there is lingering fear out there over

Evergrande and what else is out there in the rather untransparent Chinese economy and political system, plus

the Fed appears finally ready.”

The dollar index rose 0.237%, with the euro down 0.2% to $1.1713.

Kansas City Fed President Esther George said the US labor market has already met the central bank’s

test to pare its monthly bond purchases, and the discussion should now turn to how its massive bondholding

could complicate the decision on when to hike rates.

Cleveland Fed President Loretta Mester echoed the sentiment for a tapering this year, and said the

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central bank could start raising rates by the end of next year should the job market continue to improve as

expected.

In prepared remarks in a listening session with a wide swath of economic players, Fed Chair Jerome

Powell did not elaborate on his own economic or monetary policy outlook, which he had outlined at the close

of the two-day Fed meeting on Wednesday.

Sterling weakened a day after hawkish comments from the Bank of England on Thursday pushed the pound to

its biggest one-day percentage gain since Aug. 23.

The Japanese yen weakened 0.43% versus the greenback at 110.77 per dollar, while Sterling was

last trading at $1.3666, down 0.36% on the day.

Cryptocurrencies slumped after China’s most powerful regulators increased the country’s crackdown on the

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digital assets, with a blanket ban on all crypto transactions and crypto mining.

Bitcoin, the world’s largest cryptocurrency, last fell 5.89% to $42,256.47.

Smaller coins, which generally move in tandem with bitcoin, also dropped. Ether last fell

8.08% to $2,899.10 while XRP last fell 7.2889413% to $0.93.

================================================== ======

Currency bid prices at 3:21PM (1921 GMT)

Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 93.3120 93.1040 +0.24% 3.702% +93.4210 +93.0430

Euro/Dollar $1.1715 $1.1738 -0.19% -4.12% +$1.1747 +$1.1701

Dollar/Yen 110.7750 110.3300 +0.41% +7.22% +110.7900 +110.2000

Euro/Yen 129.78 129.49 +0.22% +2.25% +129.8000 +129.3900

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Dollar/Swiss 0.9252 0.9247 +0.06% +4.58% +0.9260 +0.9225

Sterling/Dollar $1.3666 $1.3723 -0.42% +0.02% +$1.3736 +$1.3659

Dollar/Canadian 1.2661 1.2658 +0.06% -0.54% +1.2730 +1.2644

Aussie/Dollar $0.7253 $0.7297 -0.60% -5.71% +$0.7316 +$0.7237

Euro/Swiss 1.0839 1.0850 -0.10% +0.30% +1.0864 +1.0822

Euro/Sterling 0.8572 0.8553 +0.22% -4.08% +0.8576 +0.8550

NZ $0.7005 $0.7070 -0.86% -2.40% +$0.7080 +$0.6997

Dollar/Dollar

Dollar/Norway 8.5925 8.5835 +0.16% +0.12% +8.6280 +8.5790

Euro/Norway 10.0674 10.0694 -0.02% -3.82% +10.1029 +10.0610

Dollar/Sweden 8.6591 8.6171 +0.16% +5.65% +8.6684 +8.6218

Euro/Sweden 10.1444 10.1277 +0.16% +0.67% +10.1507 +10.1218

(Reporting by Chuck Mikolajczak; Editing by Dan Grebler and Sonya Hepinstall)

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