Yen in safe harbor is weakened, Aussie outperforms as risk appetite improves

NEW YORK (Reuters) – The Japanese yen fell to a seven-week low against the U.S. on Tuesday, and higher-risk currencies including the Australian dollar jumped as risk appetite grew on optimism that the worst of the economic slowdown from the spread of coronavirus was in the past.

U.S. shares gained as a joy over business reopens overcome concerns over U.S.-China tensions and mass protests across the United States over the death of an African-American man in police custody. [.N]

“The good times continue to roll in risk markets,” Mazen Issa, senior FX strategist at TD Securities, said in a report. “As intense as the rally has been, this is likely to continue as the breadth of the capital rally is now spread outside the U.S.”

Greenback won 1.06% against the Japanese yen JPY = to 108.72 yen, the highest since April 9.

The dollar index against a basket of major currencies = USD fell 0.15% to 97.73 after falling as low as 97.43, the lowest since March 13.

The Australian AUD = dollar jumped 1.27% to $ 0.6883, reaching $ 0.6894, its highest since January 20.

Australia’s central bank kept interest rates at all times on Tuesday, sounding less bleak as the economy gradually reopened in what is likely to be the worst quarter since the Great Depression of the 1930s.

The euro was backed by expectations that the European Central Bank will provide more stimulus when it meets on Thursday.

A € 1.85 trillion ($ 2.04 trillion) financial package proposed by the European Commission to lift the region’s economy eases the pressure to act quickly. Nevertheless, many economists expect the $ 750 billion pandemic emergency procurement program (PEPP) to rise by 500 billion euros. ABN Amro believes it will double in size.

The total currency EUR = rose 0.27% to $ 1.1164 after it previously reached $ 1.1195, the highest since March 16.

Sterling GBP = climbed over $ 1.25 to its highest in a month against the dollar on Tuesday, as signs that the UK might be willing to compromise to set points in a new round of Brexit talks with the European Union provided support.