USD Up amidst Interest Hike Concerns and High Covid Cases

USD Up amidst Interest Hike Concerns and High Covid Cases

On Friday, July 16, the USD increased and was going for a weekly gain. This comes amidst investors worrying about an interest rate hike and the continued surge in COVID-19 cases.

The Dollar Index, which trails the greenback in opposition to its six other rival currencies, traded flat at 92.530.

The USD/JPY climbed 0.09% to 109.95 as the Bank of Japan concluded its two-day meeting earlier in the day.

It left its Yield Curve Control at -0.1% for short-term interest rates. Meanwhile, the 10-year bond yields are also going steady.

In addition, the bank slashed the current fiscal year’s growth forecast. With this move, it maintains its belief that the economy is heading towards a moderate recovery.

Likewise, the AUD/USD traded 0.15% higher to $0.7438. However, the recently implemented pandemic curbs on Melbourne and Sydney weigh on the Aussie dollar.

Consequently, the NZD/USD also jumped 0.57% to 0.7020. New Zealand’s consumer price index grew 3.3% year over year for the second quarter while having a 1.3% quarter-on-quarter.

Due to these data, the Kiwi dollar has one of the largest increases among the major currencies in the major trade.

Now, investors are betting an 86% chance that the Reserve Bank of New Zealand will have an interest rate hike next month.

If so, it will become the first developed market central bank to exit from its emergency policy settings.

Furthermore, the USD/CNY also rose 0.13% to 6.4655 as the released data last Thursday showed the Steadiness of China’s economy. This is largely due to its rising investment and consumer spending. 

Moreover, GBP/USD pair hopped 0.07% to 1.3838 as the United Kingdom prepares to lift its COVID-19 restrictions on July 19.

China Allowed Foreigners to Use Digital Yuan

Meanwhile, the People’s Bank of China stated that foreign travellers in the mainland can now use digital yuan even without a local bank account.

Mobile pay is being offered as a medium since it has grown rapidly in the last few years, therefore, becoming the nation’s dominant payment system.

However, the two major mobile apps operated by Tencent and Alibaba require a domestic bank that prevents foreigners from easy access.

Therefore, it is not yet clear when the bankless digital yuan feature will be available.

Nonetheless, it was reported that a foreigner was already able to access the currency using a domestic bank account.

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