The dollar climbed against its Group-of-10 counterparts as investors sought shelter in the US currency amid concerns that China may tighten Covid curbs.
The Bloomberg Dollar Spot Index gained as much as 0.8% on Monday, trading at the gauge’s highest level in 10 days. Among G-10 peers, the Japanese yen, Australian dollar and the euro weakened the most against the dollar. The offshore yuan slumped by 0.7%.
The greenback strengthened as Chinese officials reverted to tighter rules in a city near Beijing after the nation reported its first Covid-related death in almost six months, dashing hopes for an easing to more restrictive policies. The dollar was further buoyed by investment flows and corporate hedging activity ahead of a US Thanksgiving holiday this week.
Gains in the dollar are forcing speculative accounts out of recently established short dollar positions, FX traders said. Analysts and strategists have been debating if the dollar’s run is over after a recent slump.
“The turn lower always seemed likely to be bumpy, because China’s not safe from Covid, Europe’s not safe from energy worries and whenever there are hard landing, falling equity or geopolitical risks, it is likely to get some relief,” Societe Generale chief FX strategist Kit Juckes said.
