The dollar was flat on Friday but advanced for the fifth week in a row on its longest winning streak of 15 months, buoyed by demand for safe-haven assets on concerns over China’s economy and fears that US interest rates will remain high.

The People’s Bank of China (PBOC) posted a stronger-than-expected daily fix on Thursday, lifting the yuan above a 9-month low.

The yuan weakened against the dollar in offshore trading to 7.3060 after the PBOC set the official mid-point at 7.2006, more than 1,000 pips higher than Reuters estimates.

China’s economic troubles have deepened, with property developer China Evergrande seeking Chapter 15 protection in US bankruptcy court. There are also growing concerns over default risks in its shadow banking sector.

The US dollar index, which measures the currency against six peers, fell 0.01% to 103.380 after touching a new two-month high of 103.680 at the start of the session. It is set to gain 0.5% for the week.

“The dollar continues this bull run,” said Joe Manimbo, senior market analyst at Convera. “The U.S. economy is in better shape than expected, with markets pushing forward the timeframe for when the Fed is likely to ease.”

Minutes of the Federal Reserve’s last meeting this week showed that most members of the rate-setting committee see “significant upside risks to inflation.” Strong economic data this week, particularly retail sales, also bolstered the case for additional tightening.

The dollar also edged higher as investors looked concerned that Chinese authorities have not done enough to support the economy.

The PBOC cut rates earlier this week in a surprise move that widened the yield gap against the US, further increasing the risk of a fall in the yuan.

“Some of the data we’ve seen out of China has people getting a little worried,” said Joseph Trevisani, senior analyst at FXStreet.com.

“When you get an area that appears to be overexpanded like the Chinese property sector, especially the retail and commercial sector, it really has an impact on the economy,” he said.


intervention risk

The depreciation of the yen protected traders from the risk of interference from Japanese authorities.

The Japanese yen strengthened 0.38% against the greenback to 145.29 per dollar after hitting a nine-month low of 146.56 on Thursday.

“Traditionally or historically when things are bad in China, there has been a reversal of the yen, which makes the yen stronger, but that hasn’t happened this time,” Trevisani said.

In the autumn of last year, a rise above 145 to the dollar triggered an intervention by Japanese authorities to buy the yen for the first time in a generation.

The Australian dollar, which often trades as a proxy for China, rose 0.04% to $0.640 on Thursday after hitting a nine-month low of $0.6365.

Elsewhere, sterling fell 0.05% to $1.2741 after British retailers reported a bigger-than-expected fall in sales in July. The euro rose 0.04% to $1.08745, after touching a six-week low of $1.0856 on Thursday.

Meanwhile, bitcoin, the world’s largest cryptocurrency, slid 2.33% to $26,020 after hitting a two-month low, having lost more than 7% on Thursday as a wave of risk-off sentiment swept world markets. Was going on

“We suspect that the simultaneous sell-off in equities and fixed income eventually spread to crypto as crossover investors reduced portfolio risk,” researchers at crypto asset manager Grayscale Investments wrote in a blog post.

(Only the headline and image of this report may have been reworked by Business Standard staff; the rest of the content was auto-generated from a syndicated feed.)


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