North-West Financial Broker
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Personal Area
26 Jan - Fundamental
The dollar rose against other major currencies Tuesday, except the yen, amid concerns about Chinese bank lending, Japan's credit rating and tepid economic growth in the United Kingdom.
What prices are doing: The dollar rose 0.5% versus the euro to $1.4079 and gained 0.7% against the U.K. pound to $1.6132. But the dollar fell 0.7% against the yen to ¥89.64.
What's moving the market: The dollar, which is considered a safe haven, was supported by reports that some Chinese banks have stopped making new loans for the rest of the month.
The reports come amid signs that the Chinese government is concerned about the country's robust economic growth and is taking steps to reign in bank lending to help prevent price bubbles in certain markets.
«The market continues to be concerned about monetary and credit concerns in China,» said Sacha Tihanyi, a currency analyst at Scotia Capital in Toronto.
Traders also flocked to the yen for safety after credit rating agency Standard & Poor's downgraded Japan's debt to «negative» from «stable.»
The pound came under pressure after the U.K. government said the nation's economy grew at a slightly slower-than-expected pace in the fourth quarter.
U.K. gross domestic product rose 0.1% in the fourth quarter, compared with the third quarter. Compared with a year earlier, GDP fell 3.2%. Economists had expected a quarterly rise of 0.4%, and a full year decline of 2.9%.
«The market was disappointed by that number,» said Andy Fox, a foreign exchange trader at Sucden Financial in London. «The U.K. is out of recession, but only just.»
What analysts are saying: «Yen is the highest performer of the day on fears of a funding squeeze at Chinese banks,» Ashraf Laidi, chief market strategist at CMC markets, wrote in a note to clients.
«Reports that the [People's Bank of China] had ordered top lenders to increase their reserve requirements by an addition a 0.5% following last week's hike remain the most immediate risk to global appetite,» Laidi said.
