Home Money & Commodities Dollar extends losses with focus on US coronavirus cases

Dollar extends losses with focus on US coronavirus cases

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LONDON: The dollar fell on Monday while the euro led gains by strengthening half a percent, though currency markets lacked clear direction as surging coronavirus cases kept economic optimism in check. The global death toll from COVID-19 reached half a million on Sunday, according to a Reuters tally. Cases surged in Southern and Western U.S. states, prompting California to order some bars to close in the first major rollback of efforts to reopen the economy.
Elsewhere, profits at China’s industrial firms rose for the first time in six months in May, suggesting the country’s economic recovery is gaining traction – but the news did little to support oil prices.
The dollar fell against a basket of currencies in the Asia session, recovered briefly in early London trading, before extending falls, down 0.3% at 97.19 at 1015 GMT =USD.
Having fallen more than 1% this month, the dollar is on track for its biggest monthly loss since December 2019.
ING strategists told clients the dollar could be supported by month-end portfolio rebalancing on Tuesday.
“While a quiet data calendar today could see DXY drift down to the 96.80/97.00 area, we’d probably say much follow-through DXY selling beyond those levels looks unlikely,” they said.
There were some signs of investor caution: the Japanese yen was flat on the day, at 107.190 JPY=EBS, while the safe Swiss franc gained around 0.3% against the dollar, at 0.9449 at 1010 GMT
But the risky Australian dollar strengthened overnight even after the country reported its biggest one-day rise in new coronavirus infections in more than two months.
It eased off in early London trading on Monday, up 0.2% on the day at 0.6877 AUD=D3. The New Zealand dollar was also up 0.2% at 0.6436 NZD=D3.
The euro rose 0.6% – its biggest daily jump in a week – reaching as much as $1.128, also rising against the pound, Swiss franc and yen, even though European shares opened lower EUR=EBS EURGBP=D3 EURCHF=EBS EURJPY=EBS.
Having touched a one-month low of 1.0628 on Friday, euro-Swiss was up 0.2% at 1.06545 EURCHF=D3.
“The longer the euro can remain in the current 1.1160-1.14 range, the more positive the longer-term outlook,” Kit Juckes, head of FX strategy at Societe Generale, wrote to clients.
French President Emmanuel Macron and German Chancellor Angela Merkel will meet on Monday to discuss the planned European Union coronavirus recovery fund.