Dollar Down, but Investor Sentiment Remains Fragile Over Recession

By Gina Lee

Investing.com – The dollar was down on Thursday morning in Asia. Safe-haven currencies pressed paused after the previous session’s big gains. However, concerns are growing that tighter monetary policies from the U.S. Federal Reserve and other global central banks could impact economic growth.

The that tracks the greenback against a basket of other currencies inched down 0.03% to 103.65 by 11:42 PM ET (3:42 AM GMT). The small loss comes after a 0.55% jump during the previous session that ended the U.S. currency’s three-day losing streak.

The pair was up 0.43% to 128.76 after a 0.86% tumble on Wednesday. for April 2022, released earlier in the day, showed that rose 12.5% year-on-year, rose 28.2% year-on-year, and the contracted to -JPY839.2 billion (-$6.51 billion).

The Swiss franc, a fellow safe-haven asset, continued to strengthen. The dollar lost a further 0.13% to 0.9869 franc after a 0.6% slide.

The pair rose 0.73% to 0.7004 and the pair rose 0.56% to 0.6330.

The pair inched up 0.08% to 6.7600 and the pair was up 0.32% to 1.2378.

The benchmark steadied around 2.89% in Tokyo trading, falling from a high of 3.015% hit during the prior session.

However, investor sentiment remains fragile despite safe-haven assets cooling a recent rally. Asian stocks and U.S. futures were down, tracking a 4% drop for the and a 5% plunge for the Nasdaq the day before.

Poor U.S. housing data on Wednesday added to economic slowdown concerns, with at 1.819 million but contracting 3.2% in April 2022. were at 1.724 million but contracted 0.2% .

Fed Chairman Jerome Powell adopted his most hawkish tone to date earlier in the week, saying the U.S. central bank would hike interest rates as high as needed to stem a surge in inflation that threatened the foundation of the economy.

Powell’s stance “makes it hard to achieve a ‘soft landing’ for the U.S. economy given the long lags between changes in monetary policy and changes in inflation,” Commonwealth Bank of Australia (OTC:) currency strategist Joseph Capurso said in a note.

“The darkening outlook for the U.S. economy supports the dollar and safe-haven currencies.”

Meanwhile, the euro clawed back some of its losses and was up 0.25% to $1.0489 after Wednesday’s 0.84% slump. The pound remained under pressure after falling 1.2% overnight, with Wednesday’s data showing that the U.K.’s consumer price index grew 9% year-on-year in April 2022. The growth, the highest in 40 years,

Back in Asia Pacific, the Australian dollar shook off a smaller-than-forecast increase in the , which was 4,000 in April 2022. The latest employment data also showed that the was 92,400 and the was 3.9%.