Dollar falls against major currencies amid economic concerns; the yuan strengthens

NEW YORK, Dec 7 (Reuters) – The U.S. dollar weakened against major currencies on Wednesday on fears that rising interest rates could push the U.S. economy into recession, while an easing of Chinese restrictions linked to COVID boosted the yuan.

Peruvian soil fell when the country’s Congress voted to oust President Pedro Castillo in an impeachment trial on Wednesday. At its session low, the ground fell more than 2% against the dollar. [nL1N32X1U2]

Some investors had expected the Fed to ease its rate-tightening pace soon, but recent upbeat data on U.S. jobs, services and factories has added to investor uncertainty about the policy outlook. from the Fed. The Fed is expected to raise rates again at its meeting next week.

A U.S. dollar index, which measures the greenback against a basket of currencies, last fell 0.4%.

Several US bank executives are bracing for a deterioration in the US economy next year. Among them, Bank of America CEO Brian Moynihan told investors at a Goldman Sachs financial conference that the bank’s research showed “negative growth” in the first part of 2023, but the contraction would be “light”. Read more

According to one view, “recession worries will cause the Fed to pause. That’s why the dollar is weakening here,” said Edward Moya of OANDA in New York. “Rising interest rates have been the main driver of dollar strength over the past year.”

Against the dollar, the euro gained 0.3% to $1.0507. The euro has risen recently on signs that Europe’s economic downturn may be less severe than previously feared.

The dollar lost 0.5% against the Japanese yen.

The US dollar remained unchanged against the Canadian dollar. The Bank of Canada raised its overnight rate by 50 basis points to 4.25%, the highest level in nearly 15 years, and signaled that the tightening campaign was coming to an end. Read more

In Asia, the Chinese yuan was firmer as the government earlier announced measures that marked a step change in its strict zero-COVID policy that hit its economy and sparked historic protests.

China’s national health authority said asymptomatic COVID-19 cases and those with mild symptoms can self-treat during their home quarantine.

The announcement was the strongest sign yet that China is preparing its people to live with the disease, although analysts say the road to fully reopening the economy will be long and bumpy.

The dollar was last down 0.3% against the offshore Chinese yuan.

In cryptocurrencies, bitcoin was last down 1.5%.

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Currency rates at 3:39 p.m. (8:39 p.m. GMT)

Additional reporting by Rae Wee and Harry Robertson, editing by Sam Holmes, Kim Coghill, Arun Koyyur and Diane Craft

Our standards: The Thomson Reuters Trust Principles.

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