FOREX-Dollar gives up a bit, bitcoin hunkers down
By Rae Wee and Alun John
SINGAPORE/LONDON, Nov 22 (Reuters) – The dollar retreated on Tuesday after rising the day before as investors rushed to the safe-haven currency on worries about China’s COVID flare-up, while fears of fresh contagion from the collapse of crypto exchange FTX pushed bitcoin.
The euro was up 0.3% at $1.0265 after a 0.8% loss on Monday, the pound was up 0.46% at $1.187, partially reversing a 0.6% drop, and the greenback was at 141.86 yen, down 0.6% after rising 1.2%.
The move to the dollar on Monday came as Beijing warned it was facing its most severe test of the COVID-19 pandemic, with a surge in COVID cases triggering new restrictive measures. Deaths from the virus were also recorded in the capital for the first time since May.
Restrictions in Beijing and elsewhere tightened further on Tuesday, although currency traders appeared to believe the previous day’s moves were sufficient.
Lee Hardman, senior currency analyst at MUFG, said in a note that more cautious comments from US Federal Reserve officials were a factor in the dollar losing some momentum on Tuesday.
Cleveland Fed President Loretta Mester said the central bank could shift to smaller rate hikes starting next month, and San Francisco Fed President Mary Daly said the real impact of rate hikes is likely to be greater than the near-term interest rate target suggests.
In Europe on Tuesday, data from the European Central Bank showed that the deficit on the balance of payments in the eurozone was reduced in September.
“While we flagged the large deterioration in the current account earlier this year as creating a challenge for the euro, we can already see signs that the worst is now over,” said Dominic Bunning, head of European currency research at HSBC, although he cautioned against reading too much into one data point.
The fresh bout of risk aversion linked to China particularly weighed on the Antipodean currencies – often used as floating proxies for the Chinese yuan – with the Aussie falling almost 1% on Monday. It recouped some losses on Tuesday, rising 0.5% to $0.6639.
The trend also held longer from China, as the dollar fell 0.43% against the Swiss franc to 0.9552, reversing a similar gain the previous day.
In cryptocurrencies, bitcoin fell to a new two-year low of $15,479 on Monday, another casualty of Monday’s rush against the dollar and also amid turmoil over the health of crypto broker Genesis.
Genesis said Monday it has no immediate plans to file for bankruptcy, although Bloomberg News reported, citing sources, that Genesis was struggling to raise new money for its lending unit and warned investors it may have to file for bankruptcy if they don’t find it. financing.
The lending unit suspended redemptions last week, citing fallout from the collapse of FTX, which filed for bankruptcy on November 11.
(Reporting by Rae Wee and Alun John; Editing by Kim Coghill, Jason Neely and Emelia Sithole-Matarise)
