As the Dollar licks its wounds, The Yen goes from strength to strength
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 Dollar, extending recent gains as investors of all stripes increase positions in Chinese stocks due to growing optimism about the world’s second-largest economy.
Continuing 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 on Thursday in Asia, close to its lowest in four months, while against the Euro the Dollar was quoted at $1.1339, close to a 3 week low. The Dollar was also close to a three week low against the Pound, last trading at $1.2613.
Sterling held steady at 9.91 Pence per Euro while the Dollar was little changed at 107.33 Yen (JPY).
The euro is hoping to 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.
Asian stocks rose on Thursday after gains in the NASDAQ soared to a record closing high on Wednesday.
The onshore Yuan rose to 6.9875 per Dollar, breaking through the closely watched level 7 to the highest it has been since March 17th.
The Yuan has risen around 2.6% from a 7-month trough against the Dollar set on May 27.
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.
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.
