Dollar is falling after easing of Corona restrictions in China boosted risk appetite

The dollar fell broadly on Monday after a difficult week, dropping below seven yuan as sentiment towards riskier assets improved after signs that China would ease some restrictions related to COVID-19.

More Chinese cities, including financial hub Shanghai and Urumqi in the far west, announced easing coronavirus restrictions over the weekend in the wake of unprecedented protests over the zero Covid policy.

“They may seem like small steps, but they are nonetheless a strong sign that China is taking measured steps towards reopening,” said Christopher Wong, currency analyst at OCBC.

The dollar fell to less than seven yuan in foreign trading, while the yuan in domestic trading jumped about 1.4 percent to 6.9507 per dollar on Monday morning, the strongest level since September 13.

The dollar index, which measures the performance of the greenback against six major currencies including the yen and the euro, fell 0.18 percent to 104.28, its lowest level since June 28.

Investors will focus on US consumer price inflation data due on December 13, a day before the Federal Reserve wraps up its two-day policy meeting.

The US central bank is expected to raise interest rates by an additional 50 basis points at the meeting.

On the other hand, the Japanese yen fell 0.04 percent against the dollar, to 134.37 per dollar, after rising 3.5 percent last week, away from its lowest level in October, which reached 151.94.

The euro rose 0.38% to $1.0578, after gaining 1.3% last week. It had earlier touched its highest level in more than five months at $1.05835.

The pound sterling rose to $1.23450, the best level since June 17, and was last recorded at $1.2339, up 0.42 percent.

The Australian dollar rose 0.75% to $0.684, while the New Zealand dollar rose 0.31% to $0.643.