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Business

Dollar gives ground to higher-risk currencies as Chinese shares soar

The U.S. dollar fell against most currencies on Thursday as a rally in riskier assets such as global equities and commodities put a dent in safe-haven demand for the U.S. currency.

China’s yuan rose to a four-month high against the dollar, extending recent gains as investors of all stripes increased positions in Chinese stocks due to growing signs of a recovery in the world’s second-largest economy.

The euro was up 0.2% at $1.1355 EUR=EBS even after German export data failed to meet analysts’ expectations.

The common currency jumped earlier to a one-month high of $1.1371.

The British pound rose 0.3% to $1.2647 GBP=D3, a three-week high.

The Chinese yuan soared to a four-month high of 6.9808 in the offshore market and was last up 0.2% against the dollar CNH=EBS.

China’s currency has been a star performer as investors shrug off diplomatic tension between Washington and Beijing to focus on China’s improving economy and its attractive technology sector.

The yuan has risen around 2.3% from a seven-month trough against the dollar set on May 27.

“We’ve seen a more generalised view back to riskier assets. The Chinese equity surge has been the poster child for risk-on move across the last few sessions,” said Jeremy Stretch, CIBC Capital Markets’ head of G10 FX strategy.

Chinese shares continued their recent rally, with the blue-chip CSI300 index soaring to a five-year high on Thursday .CSI300. [MKTS/GLOB]

“Our bias for the currency quarter is 2% to 3% dollar depreciations and we see no reason to change that,” Stretch said, adding that the U.S. currency should fall as the supply from the Federal Reserve rises and the euro is poised for some modest upside gains on the back of the expected euro zone recovery fund.

Elsewhere in currencies, the Swedish and the Norwegian crowns rose to a one-month high against the dollar of 9.15 SEK=D3 and 9.35 NOK=D3 respectively.

Highlighting the dollar’s woes, the New Zealand dollar NZD=D3 rose to $0.6590, the highest since late January.

Graphic: World FX rates in 2019 here

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Business

Dollar falls as yuan leads charge in risk-on trades

TOKYO (Reuters) – The dollar fell against most currencies on Thursday as a rally in riskier assets such as global equities and commodities put a dent in safe-haven demand for the U.S. currency.

China’s yuan rose to a four-month high against the greenback, extending recent gains as investors of all stripes increase positions in Chinese stocks due to growing signs of a recovery in the world’s second-largest economy.[CNY/]

Lingering worries about the spread of the coronavirus could keep some currency pairs in a tight range, but the dollar’s losses are gradually increasing as sentiment favours riskier bets on long-term economic growth.

“Rising stocks and a dip in Treasury yields are slight negatives for the dollar, but the market can’t move too far because we still have to worry about the virus,” said Minori Uchida, head of global market research at MUFG Bank.

“A lot of major U.S. economic data have been positive, so this will be less of a trading factor going forward. People are looking for cues from stocks, yields, and hedging costs.”

Against the euro EUR=, the dollar fell 0.3% to $1.1365, reaching a one-month low.

The euro could get a further boost later in the day as Germany is scheduled to release export data. Economists expect shipments from the euro zone’s largest economy to rebound sharply in May from a large decline in the previous month.

The greenback also fell to a three-week low against the pound GBP= at $1.2637.

Sterling edged up to 89.97 pence per euro EURGBP=D3.

The dollar fell to a four-month low of 0.9365 Swiss franc CHF= on Thursday.

The dollar was little changed at 107.27 yen JPY=.

Chinese shares continued their recent rally and surged to a five-year high during the Asian session. [.SS] Futures pointed to further gains in European equities, highlighting the enthusiasm for risk-on trades.[MKTS/GLOB]

Investors are also looking to U.S. weekly jobless claims later on Thursday, but the dollar looks set to remain on the back foot until then.

The onshore yuan CNY=CFXS burst past the closely watched level of 7 to reach an almost four-month high of 6.9820 per dollar.

China’s currency has been a star performer as investors shrug off diplomatic tension between Washington and Beijing to focus on China’s improving economy and its attractive technology sector.

The yuan has risen around 2.7% from a seven-month trough against the dollar set on May 27.

While some investors are reluctant to take big positions before the traditional summer holiday season amid uncertainty around the coronavirus pandemic, analysts said sentiment favours more U.S. dollar declines as investors try to look past a recent spike in coronavirus cases in some countries.

Elsewhere in currencies, the Australian dollar AUD=D3 rose to a one-month high at $0.695.

Highlighting the greenback’s woes, the New Zealand dollar NZD=D3 rose to $0.6590, the highest since late January.

Graphic: World FX rates in 2020 here

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World News

Dollar steadies near multi-week lows, yuan shines again

TOKYO (Reuters) – The dollar nursed losses against most currencies on Thursday as a rally in riskier assets such as global equities and commodities put a dent in safe-haven demand for the U.S. currency.

China’s yuan rose to a four-month high against the greenback, extending recent gains as investors of all stripes increase positions in Chinese stocks due to growing optimism about the world’s second-largest economy.

Lingering worries about the spread of the coronavirus and a light calendar in Asia could keep some currency pairs in a tight range, but the dollar’s losses are gradually increasing as sentiment favours riskier bets on long-term economic growth.

“Rising stocks and a dip in Treasury yields are slight negatives for the dollar, but the market can’t move too far because we still have to worry about the virus,” said Minori Uchida, head of global market research at MUFG Bank.

“A lot of major U.S. economic data have been positive, so this will be less of a trading factor going forward. People are looking for cues from stocks, yields, and hedging costs.”

The dollar bought 0.9381 Swiss franc CHF= on Thursday in Asia, close to the lowest in almost four months.

Against the euro EUR=, the dollar was quoted at $1.1339, close to a three-week low.

The euro could get a boost later in the day as Germany is scheduled to release export data. Economists expect shipments from the euro zone’s largest economy to rebound sharply in May from a large decline in the previous month.

The greenback was also close to a three-week low against the pound GBP=, last trading at $1.2613.

Sterling held steady at 89.91 pence per euro EURGBP=D3.

The dollar was little changed at 107.33 yen JPY=.

Asian stocks rose on Thursday, following gains in the tech-heavy Nasdaq .IXIC to a record closing high on Wednesday.

The onshore yuan CNY=CFXS rose to 6.9875 per dollar, breaking past the closely watched level of 7 to reach the highest since March 17.

China’s currency has been a star performer against the dollar as investors shrug off diplomatic tension between Washington and Beijing to focus on China’s improving economy and its attractive technology sector.

The yuan has risen around 2.6% from a seven-month trough against the dollar set on May 27.

While some investors are reluctant to take big positions before the traditional summer holiday season amid uncertainty around the coronavirus pandemic, analysts said sentiment favours more U.S. dollar declines as investors try to look past a recent spike in coronavirus cases in some countries.

Elsewhere in currencies, the Australian dollar AUD=D3 stood at $0.6978, close to its strongest level in a month.

The New Zealand dollar NZD=D3 was little changed at $0.6573, also close to a one-month high.

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Economy

CANADA FX DEBT-Canadian dollar falls as worries rise about renewed virus lockdowns

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar retreats 0.5% against the greenback
    * Loonie trades in a range of 1.3525 to 1.3609
    * Ivey PMI shows purchasing activity expanding in June
    * Canadian bond yields ease across a flatter curve

    By Fergal Smith
    TORONTO, July 7 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Tuesday as investors grew more
worried about renewed coronavirus lockdowns slowing economic
recovery, with the loonie pulling back from a near two-week high
the day before.
    A five-day charge by world stocks          fizzled after
pandemic lockdown measures were reimposed in Melbourne,
Australia, and large parts of the United States reported tens of
thousands of new coronavirus infections.             
    "The general mood in markets today is more hostile to the
Canadian dollar," said Adam Button, chief currency analyst at
ForexLive. "Canada is more tied to the United States than any
other currency."
    Canada sends about 75% of its exports to the United States,
including oil. U.S. crude oil futures settled 1 cent lower at
$40.62 a barrel, while the Canadian dollar        was down 0.5%
at 1.3608 to the greenback, or 73.69 U.S. cents.             
    Among G10 currencies, only the Norwegian crown        lost
more ground. The loonie, which on Monday notched its strongest
intraday level since June 23 at 1.3616, traded in a range of
1.3525 to 1.3609.
    Adding to headwinds for the loonie was news on Monday that
the U.S. Supreme Court rejected a request from President Donald
Trump's administration to allow construction to start on
Keystone XL, a planned oil pipeline running from Alberta to
Nebraska.             
    "The outlook for Canadian oil exports to the United States
is darkening and we are seeing that reflected in the Canadian
dollar today," Button said.
    Still, Ivey Purchasing Managers Index (PMI) data showed
signs of economic recovery, with Canadian purchasing activity
expanding in June for the first time in four months.
                
    Canadian government bond yields eased across a flatter curve
in sympathy with U.S. Treasuries. The 10-year             was
down 3 basis points at 0.515%.
    Canadian Finance Minister Bill Morneau is due to present a
fiscal snapshot on Wednesday.

 (Reporting by Fergal Smith; Editing by Bernadette Baum and
Peter Cooney)
  

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Business

Dollar edges higher as virus worries sap risk appetite

NEW YORK (Reuters) – The U.S. dollar inched higher against a basket of currencies on Tuesday, holding above the near two-week low hit in the previous session, as investors turned uneasy over new coronavirus flare-ups and local lockdowns in some countries.

The U.S. Dollar Currency Index, which measures the greenback’s strength against six major currencies, was 0.03% higher at 96.774. On Monday, the index had fallen as low as 96.565 with its 50-day moving average slipping below its 200-day average, viewed as a bearish signal. (Graphic: Dollar death cross, here)

“While risk appetite has held the upper hand, pushing stocks higher and the dollar lower, its grip remains slippery,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

“Data and virus headlines hold the keys to the outlook,” he said.

The dollar, viewed as a safe haven, benefits when investors bail on riskier assets.

Riskier currencies such as the commodity-driven Aussie, Norwegian crown and the Swedish crown, which have rallied strongly since April alongside increased risk appetite in global markets, eased on Tuesday.

Lockdown measures were reimposed in Australia’s second biggest city on Tuesday, confining Melbourne residents to their homes unless undertaking essential business for six weeks, as officials scramble to contain a coronavirus outbreak.

In the United States, Florida’s greater Miami area became the latest hotspot to roll back its reopening as virus cases surged nationwide by the tens of thousands and the U.S. death toll topped 130,000.

U.S. health official Anthony Fauci said on Monday that the current state of the COVID-19 outbreak in the United States “is really not good.”

The surge in U.S. coronavirus cases has made business owners “nervous again,” Atlanta Federal Reserve president Raphael Bostic said on Tuesday.

Sterling held near a three-week high against the dollar as investors awaited details of the government’s plans to support the British economy.

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World News

Risk-on move dents dollar; yuan notches best day since December

NEW YORK (Reuters) – The yuan on Monday recorded its best day against the dollar since December as investors lapped up risky assets on growing expectations of a strong Chinese economic rebound and as glimmers of good news in U.S. data drove down demand for the safe-haven dollar.

An index of blue-chip Chinese shares soared to its highest in five years as traders bet on a revival in China, pushing the offshore yuan CNH= to its highest level since March 17, its best daily performance since Dec. 12. It was last at 7.015 yuan per dollar.

“Clearly we have an improvement in global risk appetite. And I would pin the blame for that on Chinese regulators who appear to have encouraged the national team in the markets, and really helped to drive a big spike in equity indices,” said Karl Schamotta, chief market strategist at Cambridge Global Payments.

“What that signals to markets is that, although we’re not seeing a 2009-style stimulus effort in China, at least not from a monetary policy perspective – we are seeing signs of a concerted rescue effort.”

Green shoots in U.S. data also weakened demand for the safe-haven dollar. Against a basket of six rival currencies, it was last down 0.43% at 96.76, having earlier hit its lowest since June 24.

U.S. services industry activity rebounded sharply in June, almost returning to its pre-COVID-19 pandemic levels. A resurgence in coronavirus cases, however, has forced some restaurants and bars to close again, threatening the emerging recovery.

The multi-day move lower in the dollar index triggered a significant technical event called a death cross – in which the dollar index’s 50-day moving average crossed below its 200-day moving average – indicating the potential for a sell-off.

The pattern has been followed by a period of dollar weakness in eight out of nine instances since 1980, analysts at Bank of America said.

“It signals that you’re seeing positive sentiment taking hold… on the back of a more positive view of the global economy,” said Charles Tomes, portfolio manager at Manulife Investment Management.

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Business

China waves the green flag for FX bulls

LONDON (Reuters) – The yuan led commodity currencies higher against the dollar on Monday as investors lapped up risky assets on growing expectations of a strong Chinese economic rebound and the United States continued to report a surge in coronavirus infections.

An index of blue-chip Chinese shares .CSI300 soared to its highest in five years as traders bet on a revival in China, pushing the yuan to its highest levels since March 18 against the dollar =USD.

“The rally in mainland China equities has been the big catalyst,” said Stephen Gallo, European head of FX strategy at BMO Financial Group.

“The only caveat is that China’s economy not driven purely by free-market forces.┬áBut if regulators in China are engineering a stronger equity market, it can still feed through to the rest of the world.”

A revival in Chinese economic activity bodes well for Australia and Europe who count Beijing as their biggest trading partner.

The euro rose 0.5% to $1.1303 to a two-week high also supported by strong data: German industrial goods rose by 10.4% in May, rebounding from their biggest drop since records began in 1991 and the bloc’s retail sales figures rose above pre-coronvirus levels in some countries.

The Australian dollar AUD=D3 rose 0.3% to $0.6970 following a 1.2% gain last week, with the market focused on a Reserve Bank of Australia policy meeting on Tuesday.

Against a basket of currencies =USD, the dollar edged 0.3% down to 96.87, its lowest level since July. 2.

The broad recovery in risk appetite pushed the dollar lower. Already grappling with a steady rise of coronavirus infections in the United States, the dollar was further dented by a further culling of economic projections.

Goldman Sachs meanwhile revised its economic projections for the U.S. economy down to a 4.6% contraction in 2020 versus a previous estimate of -4.2%.

“The healthy rebound in consumer services spending seen since mid-April now appears likely to stall in July and August as authorities impose further restrictions to contain the virus spread,” Goldman analysts said in a note.

Speculators’ net bearish bets on the U.S. dollar grew to the largest position in nearly two years in the latest week, according to and U.S. Commodity Futures Trading Commission data released on Friday.

“As long as the Fed is still buying assets and prepared to do more, we expect this negative correlation, Risk On, Dollar Off, to dominate financial markets over the coming quarters,” said Chris Turner, global head of markets at ING.

(Graphic: FX positions, here)

Sterling GBP=D3 moved slightly higher to $1.2509 against the dollar amid reports British Finance Minister Rishi Sunak plans to raise the property tax threshold and temporarily cut the value-added tax (VAT) in the hospitality sector.

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World News

Dollar in tight range ahead of U.S. services sector data

TOKYO (Reuters) – The dollar held steady against most currencies on Monday as investors awaited data expected to show the U.S. services sector stopped contracting, and highlighting the economic recovery from the coronavirus pandemic.

The euro moved in a narrow range before economic data from Germany and the eurozone that are also forecast to show a sharp rebound in corporate activity and retail sales, which would ease concerns about the economic outlook.

A steady rise of new coronavirus infections in the United States has discouraged some investors from taking on excessive risk, but most market participants remain focused on the growing likelihood that major economies will continue to recover.

“When it comes to dollar/yen, recovery expectations are supporting the dollar, but worries about the virus are capping the upside,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

“The markets are focused on other currency pairs, like the Australian dollar, which is still in a clear uptrend against the U.S. dollar due to the rise in copper prices.”

The dollar held steady at 107.56 yen JPY=D3 on Monday in Asia following a 0.3% gain last week. Market activity was subdued following the July 4 long weekend holiday in the United States.

The euro EUR=D3 changed hands at $1.1247. Against the British pound, the common currency bought 90.18 pence EURGBP=D3.

Sterling GBP=D3 moved in a narrow range at $1.2474.

Against the Swiss franc, the dollar CHF=D3 was quoted at 0.9455.

The Institute for Supply Management’s index for non-manufacturing activity due later on Monday is expected to rise to 50.0 in June from 45.4 in the previous month, indicating activity stopped shrinking.

The greenback has been locked into narrow trading ranges recently as concerns about a resurgence in U.S. coronavirus infections offset growing optimism about the economy.

The euro will come into focus later in the trading day as Germany, the euro zone’s largest economy, is scheduled to release industrial orders for May.

Retail sales for all of the eurozone will also be released later on Monday. Both indicators are forecast to recover strongly from large declines caused by the spread of the coronavirus.

Elsewhere in currencies, the Australian dollar AUD=D3 traded at $0.6944 on Monday in Asia following a 1.2% gain last week.

The Aussie is another market focus ahead of a Reserve Bank of Australia (RBA) policy meeting on Tuesday. Analysts expect that rates will stay at 0.25% amid signs that Australia’s economic downturn will not be as dire as first feared.

Recent gains in prices of copper and other commodities that Australia exports, combined with a more positive tone for the RBA, are likely to support the Aussie, analysts say.

Across the Tasman Sea, the New Zealand dollar NZD=D3 was quoted at $0.6535.

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Business

Dollar in narrow range as U.S. virus cases grow

TOKYO (Reuters) – The dollar was hemmed into a narrow range on Friday, supported by safe-haven flows as a resurgence of the coronavirus in the United States discouraged some investors from taking on excessive risk.

The yuan was stable in offshore trade before data on China’s services sector, but investors may avoid taking big positions due to worries about diplomatic friction between Washington and Beijing over civil liberties in Hong Kong.

The U.S. economy added more jobs than expected in June, data showed on Thursday, but reaction in the currency market has been muted because another spike in coronavirus infections threatens to once again put the breaks of economic activity.

“New infections in the United States have been on an uptrend since June,” said Junichi Ishikawa, senior foreign exchange strategist at IG Securities.

“The market is leaning more toward buying the dollar, particularly against emerging market currencies, because the dollar is considered the safest asset around.”

Against the euro EUR=D3, the dollar was quoted at $1.2395 on Friday in Asia.

The dollar held steady at 0.9469 Swiss franc CHF=D3 on Friday after three straight days of gains.

The British pound GBP=D3 traded hands at $1.2471.

The dollar was little changed at 107.50 yen JPY=EBS.

A wave of coronavirus infections has prompted the halting of or back-pedalling on plans to reopen economic activity in several U.S. states after months of strict lockdowns.

Officials are also taking steps to curtail activity during the extended Independence Day holiday weekend starting on Friday.

Trading in currency markets on Friday may be subdued before the U.S. holiday, but analysts say sentiment favours more gains in the dollar as investors turn cautious.

Relations between the United States and China are also in focus.

The U.S. Senate unanimously approved legislation on Thursday to penalize banks doing business with Chinese officials who implement Beijing’s new national security law for Hong Kong, raising the chances of further friction between the world’s two- largest economies.

In the offshore market, the yuan CNH=D3 was little changed at 7.0732 per dollar.

The Australian dollar AUD=D3 held steady at $0.6917 on Friday before data expected to show a sharp rebound in retail sales in May.

Across the Tasman Sea, the New Zealand dollar NZD=D3 traded at $0.6509.

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World News

FOREX-Dollar set for biggest weekly drop in a month before U.S. data

* Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

By Saikat Chatterjee

LONDON, July 2 (Reuters) – The U.S. dollar slipped to a one-week low against its rivals on Thursday as upbeat U.S. and European economic data sharpened risk appetite, with hopes for a COVID-19 vaccine breakthrough also helping sentiment.

Against a basket of currencies, the greenback is on track for its biggest weekly drop in a month, of 0.5% with the rise in coronavirus cases in the U.S. weighing on sentiment.

Data due at 1230 GMT is expected to show non-farm payrolls figures increased by 3 million jobs last month before a long holiday weekend. U.S. markets are shut on Friday.

A larger than expected gain could help the dollar regain some ground.

Estimates vary widely amid concerns about whether the U.S. economy can sustain its recovery as coronavirus infections surge and some states reimpose limits on business and personal activity.

“A renewed significant fall in the unemployment rate would make the market feel confident about a recovery,” said Thu Lan Nguyen, an FX strategist at Commerzbank in Frankfurt.

“In that case we would see risk-on, which should theoretically be negative for the U.S. currency since the U.S. dollar has been in demand as a safe haven during the crisis,”

Despite the dollar’s recent spell of weakness, the greenback is still up 2.5% from the 2020 low of 94.6 it hit in early March. A Reuters poll predicts more weakness for the greenback over the next 12 months due to weak global demand.

Supporting sentiment in the meantime was news that a COVID-19 vaccine developed by German biotech firm BioNTech and U.S. pharmaceutical giant Pfizer had shown potential in early-stage human trials.

U.S. manufacturing activity also rebounded more than expected in June, with the Institute for Supply Management’s manufacturing activity index hitting its highest in 14 months.

Similar surveys from China, Germany and France all pointed to an improvement in factory activity.

The positive risk sentiment boosted other risk-oriented currencies such as the New Zealand dollar, which gained nearly 0.5% versus the greenback, and the euro, which advanced 0.1% to $1.1264.

The mood also lifted sterling above $1.25 for the first time in a week. It last sat at $1.2482, having bounced almost 2% from a one-month low hit on Monday.

Falling volatility also boosted sentiment, with a gauge of currency market volatility holding near a one-month low.

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