Dollar eases against major currencies amid rate, economic concerns; yuan strengthens

By Caroline Valetkevitch

NEW YORK (Reuters) - The U.S. dollar weakened slightly against major currencies on Wednesday amid concerns that rising interest rates could push the U.S. economy into recession, while an easing of China's COVID restrictions boosted the yuan.

Some U.S. bank executives are bracing for a worsening U.S. economy next year. Among them, Bank of America CEO Brian Moynihan told investors at a Goldman Sachs financial conference that the bank's research shows "negative growth" in the first part of 2023, but the contraction will be "mild."

Some investors have been anticipating the Fed will soon slow its rate tightening pace, but recent upbeat U.S. employment, services and factory data has added to investor uncertainty over the Fed's policy outlook. The Fed is expected to raise rates again when it meets next week.

A U.S. dollar index, which measures the greenback against a basket of currencies, was last down 0.2%.

One view is that "recessionary worries are going to drive the Fed to pause. This is why the dollar is weakening here," said Edward Moya at OANDA in New York. "Surging interest rates have the primary driver for dollar strength over the last year."

Against the dollar, the euro was up 0.2% at $1.0488. The euro has risen recently on signs that Europe's economic downturn may be less bad than previously feared.

The dollar was down 0.2% against the Japanese yen.

The U.S. dollar was down 0.1% against the Canadian dollar. The Bank of Canada hiked its benchmark overnight interest rate by 50 basis points to 4.25%, the highest level in almost 15 years, and signaled the tightening campaign was near an end.

In Asia, China's yuan was firmer as the government earlier announced measures that marked a sharp change to its tough zero-COVID policy that has battered its economy and triggered historic protests.

China's national health authority said asymptomatic COVID-19 cases and those with mild symptoms can self-treat while in quarantine at home.

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

The dollar was last down 0.1% against the offshore Chinese yuan.

In cryptocurrencies, bitcoin last was down 1.7%.

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Currency bid prices at 11:31AM (1631 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index

105.3300 105.5500 -0.19% 10.105% +105.8200 +104.8600

Euro/Dollar

$1.0488 $1.0474 +0.15% -7.74% +$1.0550 +$1.0444

Dollar/Yen

136.7900 137.0250 -0.17% +18.83% +137.8500 +136.3850

Euro/Yen

143.46 143.43 +0.02% +10.08% +144.5700 +143.1800

Dollar/Swiss

0.9402 0.9422 -0.20% +3.09% +0.9437 +0.9364

Sterling/Dollar

$1.2172 $1.2135 +0.35% -9.96% +$1.2225 +$1.2109

Dollar/Canadian

1.3647 1.3653 -0.06% +7.92% +1.3700 +1.3590

Aussie/Dollar

$0.6704 $0.6688 +0.27% -7.75% +$0.6734 +$0.6669

Euro/Swiss

0.9860 0.9856 +0.04% -4.91% +0.9896 +0.9839

Euro/Sterling

0.8614 0.8623 -0.10% +2.55% +0.8643 +0.8610

NZ

Dollar/Dollar $0.6350 $0.6318 +0.54% -7.20% +$0.6384 +$0.6310

Dollar/Norway

10.0345 10.0250 -0.30% +13.46% +10.0755 +9.9710

Euro/Norway

10.5300 10.4909 +0.37% +5.16% +10.5671 +10.4198

Dollar/Sweden

10.3945 10.4054 +0.11% +15.27% +10.4425 +10.3238

Euro/Sweden

10.8963 10.8847 +0.11% +6.47% +10.9352 +10.8736

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