Dollar steadies ahead of Fed, yuan breaks key level

The dollar hovered near its recent peaks on Friday as expectations that the United States Federal Reserve would need to hike more to tame inflation sent Treasury yields higher and kept the greenback in demand. The towering dollar pushed the offshore yuan past the critical threshold of seven per dollar for the first time in more than two years overnight, with the yuan hitting a trough of 7.035 in Asia trade. The onshore unit similarly broke the key level soon after markets opened on Friday, and last traded at 7.009 per dollar. Data on Friday showed China’s economy was surprisingly resilient in August, with factory output and retail sales both growing more than expected last month. But a deepening property slump weighed on the outlook . “Growth, policy divergence between the US and China could continue to support the USDCNH in the next few months, even if some pullback is seen intermittently,” said analysts at Maybank, who noted some “upside surprises” in the Chinese data release.