One month high-Dollar, Evergrande risks

The dollar held below a near one-month high. This is because the investors focused on two key risks. One is the Chinese property developer Evergrande and the other one expected pace of U.S. monetary policy tightening. The dollar index stood at 93.226 in early Asian trade. The euro changed hands at $1.1725. The common currency dropped to 127.93 yen. The dollar traded at 109.165 yen. The Bank of Japan is expected to keep its policy on hold.

Tohru Sasaki, head of Japan markets research at JP Morgan said that due to worries about Evergrande, the market is still in risk-off mood. This is with the support of both the dollar and the yen. The yen has been generally shorted by many players so there can be room for more short-covering, as per his view. Evergrande was once China’s top-selling property developer. It is now inching closer to a key deadline. The bonds would be deemed in default, when Evergrande fails to settle the interest within 30 days.

If incoming data holds up, there are rising expectations that the central bank will signal its plans to start reducing its massive bond purchases in November. The dot plot charts policymakers economic and rates projections, will attract attention for clues. JP Morgan’s Sasaki said that perhaps tapering is already baked in. What will matter the most for the currency market is how dot-plots or comments from Powell will affect U.S. rate expectations. Then the Canadian dollar stood little changed. The United States unveiled sanctions against a cryptocurrency exchange.