Dollar nurses
losses as currency markets
eye recovery prospects
By Tom Westbrook
SINGAPORE (Reuters) - The dollar nursed broad losses on
Thursday and riskier currencies held gains as investors looked to a bright
recovery from the COVID-19 pandemic, shrugging off diabolical forecasts and
rising Sino-U.S. tension.
In bullish overnight trade, the risk-sensitive Australian
dollar broke free from two months of rangebound moves to hit a ten-week high of
$0.6616. The kiwi hit a ten-day top of $0.6157 and both seemed poised for
further gains.
"I think they might keep going," said Westpac FX analyst
Imre Speizer.
"It's one big rally and that rally hasn't finished
yet," he said. "The trend is clearly still upward for equities and
currencies are mostly following it, even if not as strongly."
The S&P 500 (SPX) is up about 35% from its March lows
and the Australian dollar has rallied about 20% since then.
Both the Aussie and the kiwi were lower in morning trade,
but moves were slight as markets await a speech from Australia's central bank
chief at 0230 GMT and purchasing manager surveys in Britain, Europe and the
United States later on.
Japan's flash purchasing managers' index on Thursday showed
manufacturing activity slumping again in May.
Overnight, traders interpreted economic outlook downgrades
in the U.S. Federal Reserve's April meeting minutes as likely to herald more
stimulus, pushing stocks higher. (N)
"Almost everywhere, policy makers are continuing to
stress that whatever resources are required will be made available," ANZ
analysts said in a note on Thursday.
The euro (EUR=) hit its highest in three weeks, the Swiss
franc its highest in two weeks and the Chinese yuan its highest in one week,
while emerging market currencies also surged.
In Asia, the euro last sat just below that peak at $1.0975
and the dollar inched higher on the Japanese yen to 107.68.
The yuan was steady at 7.1067 in offshore trade, even as
diplomatic tensions between China and Australia simmered and after the United
States took fresh aim at Beijing's handling of the coronavirus on Wednesday.
U.S. Secretary of State Mike Pompeo called the $2 billion
that Beijing has pledged to fight the pandemic "paltry compared to the
cost that they have imposed on the world."
The exception to the broad dollar weakness was the British
pound, which remains under pressure following inflation data that fuelled more
speculation the Bank of England would cut interest rates below zero.
"(It) keeps the debate about negative rates alive and
kicking," said Kit Juckes, macro strategist at Societe Generale
(OTC:SCGLY).
"Poor old sterling," he said. "There is
clearly a better case for shorts in sterling/yen than euro/yen now, and even
more so in being short sterling/Aussie as well as sterling/yen, give the slight
risk-on bias and the move higher in resource prices."
0 Comments