The dollar falls as the focus shifts to recovery in recovery By Reuters

By Stanley White

TOKYO (Reuters) – The dollar plunged against most Asian currencies on Wednesday as prospects for more government stimulation and a global economic recovery prompted investors to bolster equity in riskier assets.

The Australian dollar hit a five-month high against the dollar as funds heading toward economies seen to recover rapidly after the coronavirus pandemic.

Those who have benefited from signs that the economic downturn may be less severe than initially feared could get a further boost if data from the gross domestic product in the first quarter, due Wednesday, show that the country avoided a contraction.

is also in focus before releasing the service sector data from the world’s second largest economy, which may strengthen expectations of economic recovery.

Greenback also plunged against the British pound and suffered losses against Swiss France in port as investors contemplated mass protests against racism spreading across the United States.

“The US dollar is generally weak,” said Yukio Ishizuki, FX strategist at Daiwa Securities in Tokyo.

“The Australian dollar has a lot of room to run because there’s still a lot of shorts to cover. The history of economic recovery is the most important factor.”

The Australian Dollar rose early in Asian trade to $ 0.6930, the highest since January. 7th

Over the Tasman Sea, the New Zealand dollar jumped to $ 0.6391, the highest since March 9.

Greenback also fell to a low of $ 1.2584 against the British pound .

The Aussies continued to draw buyers after the Reserve of Australia on Tuesday focused on the prospects of a rapid coronavirus shock recovery.

Australia’s GDP data is unlikely to capture the full impact of coronavirus lockdowns on the economy, but traders say the sentiment for Aussie has become bullish because the restrictions in the shutdown are easing and due to rising commodity prices.

Traders will also monitor the yuan’s opening in the onshore trade and the release of China’s PMI services for May.

The coronavirus first appeared in China late last year, but it is also the first major economy to alleviate serious lockdown restrictions, which means it is likely to recover earlier than other countries.

Greenback’s fortunes against other currencies in the safe harbor were mixed.

The dollar bought 0.99619 Swiss francs , close to a two-month low.

U.S.A. currency rose briefly to a two-month high of 108.40 yen threatening to break out of the recent trade area.

U.S. President Donald Trump has threatened to use the military to curb protests against racism and police brutality, but the U.S. Shares continue to accumulate, leaving some traders to grope for direction.

Euro () bought $ 1,1180 on Wednesday in Asia, close to its highest since March 16, in hopes that policy makers will support the eurozone’s weakest economies.

The European Central Bank is expected to increase its $ 750 billion ($ 839.25 billion) bond buying program, the pandemic emergency buyout program, on Thursday, likely by about 500 billion euros.

The ECB collected all of Italy’s new debt in April and May, but only managed to prevent borrowing costs for the debt-ridden, virus-affected country from rising, data shows Tuesday.