Forex

Dollar edges up, yen falls as easing lockdowns boosts risk appetite

Reuters TOKYO | Updated on May 11, 2020 Published on May 11, 2020

The dollar edged up in early London trading on Monday, while the Japanese yen weakened as risk appetite was boosted by more countries making moves to re-open their economies, despite the coronavirus continuing to spread.

Japan said on Monday it could end its state of emergency in many regions this week and New Zealand said it could ease restrictions on Thursday. The UK has also set out plans to ease the lockdown while in France shops re-opened on Monday.

The safe-haven Japanese yen hit a 10-day low versus the dollar, down more than 0.5 per cent since New Yorks close. Against a basket of comparable currencies, the dollar up around 0.1 per cent.

“The ongoing improvement in global investor risk sentiment following acute financial market strains in March reflects in part building investor optimism that the global economy is past the worst point of the COVID-19 crisis,” Lee Hardman, currency analyst at MUFG, wrote in a note to clients.

A conciliatory phone call between US and China trade negotiators on Friday also provided a boost to risk appetite, as it staved off fears of an imminent new round of US tariffs, even after US President Donald Trump said he was “very torn” over whether or not to end the preliminary phase one trade deal between the two countries.

The euro was down slightly, having fallen in early London trading, last down around 0.1 per cent versus the dollar at $1.0832 .

The riskier Australian dollar was up slightly, while the New Zealand dollar was down 0.2 per cent, having fallen from around 0400 GMT.

The Norwegian crown hit new monthly highs versus the dollar at 0600 GMT, extending its decline from a late April lowpoint, last up around 0.3 per cent.

Easing lockdowns is interpreted as positive by traders as it enables economic activity curtailed by the coronavirus to resume. Lifting the lockdowns too early, however, risks triggering another wave of the new coronavirus.

South Korea warned of a second wave of the virus as infections rebounded to a one-month high and new infections have accelerated in Germany.

The US economy shed 20.5 million jobs in April, and the unemployment rate rose to 14.7 per cent, a government report on Friday showed. The true unemployment rate may be closer to 19.5 per cent.

Swiss franc site deposit data due on Monday is expected to show another large rise, which would support the theory that the Swiss National Bank wants to prevent the euro-franc exchange rate from going below 1.05, ING analysts wrote in a note to clients.

The franc was last down around 0.1 per cent versus the euro as demand for safe-havens eased, at 1.05295.

 

Published on May 11, 2020

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