Dollar rises and yen falls behind as more countries ease
lockdowns
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[May 11, 2020] By
Elizabeth Howcroft
LONDON (Reuters) - The dollar rose on
Monday as investors worried that economic recovery might be slower than
hoped and sought the safety of the U.S. currency even though more
countries eased coronavirus lockdowns.
The dollar was broadly flat overnight but rose in early London trading
as investors adjusted their risk expectations with an eye on warnings of
a second wave of COVID-19 infections.
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.
South Korea warned of a second wave of the virus as infections rebounded
to a one-month high and new infections have also accelerated in Germany.
"More of a risk-off tone has taken over at the start of this week," said
Lee Hardman, currency strategists at MUFG, who said that there were some
concerns that the re-opening of economies in places such as Germany may
have led to a pick-up in infection rate.
Against a basket of comparable currencies, the dollar was last up 0.3%
since New York's close, at 100.090.
The safe-haven Japanese yen hit a 10-day low versus the dollar, down
around 0.6%, after a U.S. buyer bought a large amount of dollar-yen,
forcing the pair above 107.
Also weighing on global risk sentiment is the prospect of worsening
tensions between the U.S. and China.
A conciliatory phone call between U.S. and China trade negotiators on
Friday staved off fears of an imminent new round of U.S. tarrifs. But
U.S. President Donald Trump said he was "very torn" over whether or not
to end the preliminary phase one trade deal between the two countries.
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U.S. dollar banknote is seen in this picture illustration taken May
3, 2018. REUTERS/Dado Ruvic/Illustration/File Photo
On Monday, China warned that it will take countermeasures in response to
a U.S. decision to tighten visa terms for Chinese journalists. This news
did not move the market, analysts said.
The euro fell against the dollar, last down around 0.3% at $1.08165.
"Developments in the euro area keep Eurozone equities and banks
underperforming vs. the rest of the world, which does not help the
euro," Morgan Stanley analysts wrote in a note to clients.
The riskier Australian dollar was down 0.7% versus the U.S. dollar, while the
New Zealand dollar was down 0.9% having fallen from around 0400 GMT.
The Swedish crown fell around 0.5% against the dollar, weakening to as much as
9.8150, also down around 0.2% against the euro, at 10.5985.
Minutes from the Riksbank's latest meeting, published on Monday, showed that
Swedish rate-setters were united on seeing balance sheet measures as currently
the best way of conducting policy amid the outbreak of the novel coronavirus.
"EUR/SEK is approaching attractive levels to buy, the pair is oversold and no
longer reflects the likely central bank easing coming up. We suggest buying EUR/SEK
on dips down to 10.55 (the long term support) and target 11.20," wrote Morgan
Stanley analysts.
"All in, the factors which drove the EUR/SEK strength in the past eight years
seem likely to continue to hold," they added.
(Reporting by Elizabeth Howcroft, editing by Ed Osmond and Philippa Fletcher
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