TOKYO, Sept 5 — Jitters about global growth caused the dollar to rise today, sending the euro to its lowest in nearly three months and the Aussie down over 1 per cent, not helped by underwhelming data in China and the Reserve Bank of Australia keeping rates steady.

The euro was down 0.45 per cent at 1.0747, while sterling fell 0.6 per cent to US$1.2555 (RM5.85), with both their lowest levels since mid-June after poor activity data in China and Europe drove a risk off tone across asset classes.

China’s Caixin services PMI was at levels last seen when swathes of the country were under lockdown, the latest in a series of weak data points from the world’s second largest economy, while data showed euro zone business activity decline faster than initially thought last month.

“The twin drivers of dollar strength of US higher yields and weaker growth conditions out of the US are still in fifth gear,” said Simon Harvey head of FX analysis at Monex Europe.

US treasuries fell on resuming trading after a holiday with the US 10-year yield up 4.5 basis points at 4.2163 per cent.

The China-exposed Australian dollar was the most affected, falling 1.46 per cent to US$0.6372 hurt too by the RBA’s latest policy update.

The central bank left its benchmark cash rate on hold at 4.1 per cent for a third month in a row, and although it left the door open to future increases, markets are pricing only about a 30 per cent chance that rates go higher from here.

“The RBA’s policy stance overall remains a weight on the Aussie, especially against the US dollar, where the Fed funds rate seems highly likely to remain 125+ basis points above the RBA cash rate deep into 2024,” said Westpac analyst Sean Callow.

The dollar was strong across the board, climbing against China’s currency, and was last up 0.47 per cent at 7.3096 against the yuan traded offshore and up nearly as much in onshore markets.

The greenback also rose 0.56 per cent against the Canadian dollar to US$1.3669, its highest since late March, and up 0.85 per cent against the Swedish crown at 11.10, its highest since November 2022.

The yen was at around a one-week low and analysts see it grinding toward 150 per dollar unless there is a sharp change in the gap between Japanese yields, pegged near zero, and US yields comfortably above 4 per cent. A dollar last bought 146.95 yen.

A Japanese government bond auction on Tuesday was uneventful, leaving 10-year Japanese yields at 0.65 per cent. — Reuters