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The U.S. Dollar Index (DXY) eased in Wednesday trading, slipping 0.3%, after consumer prices in France cooled more than expected in December, the third major European economy to signal that inflation may be past its peak.
That comes as investors appear optimistic that China’s relaxation of its zero-COVID policy will help revive growth in the world’s second largest economy. That gave a boost to commodities-linked currencies, such as the Australian dollar. The A$ jumped 1.8% against the US$ in late morning trading, New York time. The euro rose 0.5% against the greenback and Chinese yuan gained 0.4%.
The U.S. Dollar Index, which measures the greenback against a basket of currencies, stands at 104.23 on Wednesday, down 9.2% from its 52-week high of 114.78 on Sept. 28. It’s still up 8.3% from a year ago, in contrast with the S&P 500’s decline of almost 20% during the same period.
Related tickers: DB US Dollar Index Bearish Trust (NYSEARCA:UDN), WisdomTree Bloomberg U.S. Dollar Bullish Fund (NYSEARCA:USDU), Invesco CurrencyShares Australian Dollar Trust ETF (NYSEARCA:FXA), WisdomTree Chinese Yuan ETF (NYSEARCA:CYB).
On Tuesday, German inflation eased in December after Spain numbers also pointed to receding pressure.
Last month, Morgan Stanley upgraded China equities of Overweight on multiple catalysts, including liquidity, the policy cycle, and the trend in the yuan vs. the U.S. dollar.
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