Dollar plummeting losses as foreign exchange markets increase recovery by Reuters

By Tom Westbrook

SINGAPORE (Reuters) – The dollar plagued major losses on Thursday, with riskier currencies holding gains as investors looked for a clear recovery from the COVID-19 pandemic, pulling off diabolical forecasts and rising Sino-U.S. excitement.

In bullish trading at night, the risk-sensitive Australian dollar broke free from two-month rangebound moves to hit a ten-week high of $ 0.6616. That hit a ten-day high of $ 0.6157 and both seemed ready for further gains.

“I think they might want to move on,” said Westpac FX analyst Imre Speizer.

“It’s a big rally and it’s not over yet,” he said. “The trend is clearly still upward for equities, and currencies mostly follow, though not as strongly.”

The S&P 500 () has risen by around 35% compared to its low-level March, and the Australian dollar has risen approx. 20% since then.

Both kiwi and kiwi were lower in morning trading, but movements were easy as markets await a speech from Australia’s central bank governor at. 0230 GMT and purchasing manager surveys in the UK, Europe and USA later.

Japan’s index of flash buying managers on Thursday showed that production activity dropped again in May.

Overnight, dealers interpreted the U.S. economic outlook. The Federal Reserve meeting minutes from April were likely to involve more stimulus and push stocks to higher. ()

“Almost everywhere, policy makers continue to emphasize that whatever resources are required will be made available,” ANZ analysts said in a note Thursday.

The euro () hit the highest in three weeks, the Swiss franc it is the highest in two weeks and its peak in a week, while currencies in emerging markets also rose.

In Asia, the euro was last just below this peak of $ 1.0975 and the dollar was higher on the Japanese yen to 107.68.

The yuan was constant at. 7,1067 in offshore trade, even as diplomatic tensions between China and Australia simmered, and after the United States took new aim at Beijing’s handling of coronavirus on Wednesday.

U.S. Secretary of State Mike Pompeo called the $ 2 billion that Beijing has pledged to fight the pandemic “mind against the costs they have imposed on the world.”

The exception to the broad dollar weakness was the British pound, which remains under pressure after inflation data prompted more speculation the Bank of England would lower its interest rate below zero.

“(It) keeps the debate about negative rates alive and kicking,” said Kit Juckes, macro strategist at Societe Generale (OTC :).

“Poor old sterling,” he said. “There is clearly a better case for shorts in sterling / yen than the euro / yen now, and even more in being short sterling / Aussie as well as sterling / yen gives the low risk of malice and move higher in resource prices.”