Dollar steadies as China reopens cautiously

After China lifted its quarantine rule for incoming travelers from January 8, countries such as the US, Japan and India have said travelers from China will be required to undergo a COVID test.

The pace at which the country has gradually lifted Covid rules has overwhelmed the country’s fragile health system and fueled concerns about the spread of the virus.

The Japanese yen was most recently up 0.5% at 133.83 per dollar, although the yen was near a one-week low of 134.50, hit in the previous session.

The British pound rose 0.19% to $1.2040, but was close to $1.1993 reached last week.

The euro rose 0.15% to $1.0628.

“Many countries introducing additional screening for travelers from China reflect the resumption of travel amid the Chinese outbreak,” said Vishnu Varadhan, head of economics and strategy at Mizuho Bank. “It could also fuel fears of new strains of COVID disrupting the global recovery again.”

Uncertainty about the global economic outlook and growing worries about a recession in the U.S. sent two-year Treasury yields, which typically track interest rate expectations, lower overnight. The latest reading is 4.3512%.

The benchmark US 10-year Treasury yield was at 3.8656% after rising to a one-month high of 3.8920%. [US/]

The US dollar index was steady at 104.28 against a basket of currencies.

“In the short term, the big question mark is how quickly we can recover from this Covid impact,” said Bank of Singapore currency strategist Mo Cheong Sim. “But in the medium term… I think the growth outlook for China could become more stable and less flat, which means the rest of the world could also benefit.”

The Aussie rose 0.16% to $0.6751 and the Kiwi was up 0.33% to $0.6331.

The Chinese yuan was slightly higher at 6.9932 per dollar.

Among cryptocurrencies, Bitcoin rose 0.13% to $16,561 and Ether gained 0.26% to $1,192.60, although both are on track to fall more than 60% this year.