FOREX-Dollar gains as risk-taking appetite wanes
May 21, 2020
The dollar edged higher on Thursday as Sino-U.S. tensions and weak economic indicators in Europe dented sentiment after hopes of a quick economic recovery and further stimulus fuelled an overnight rally on Wall Street. Against a basket of currencies =USD the greenback rose 0.2% to 99.40 while U.S. stock futures ESc1 were trading in the red.
The euro EUR= eased down 0.1% to $1.0972, giving up some gains secured after a Franco-German proposal for a pan-European Union fund propped up hopes the bloc could move closer to a
fiscal union. Stock markets across Europe opened in negative territory while shortly after the bell, data showed that France’s business slump eased not quite as much as expected in May. Shortly after that, an indicator which tracks the manufacturing and services sectors showed that Germany’s
recession eased in May but also less than anticipated. “The rate of decline in activity has eased considerably since the peak of virus containment measures in April, but we are still a long way off business as usual and the path to recovery remains unclear,” IHS Markit economist Phil Smith said.
In Britain, weak inflation is driving bets that the Bank of England may cut interest rates below zero. The pound GBP=D3 remains under pressure against the greenback, slipping 0.3% to $1.2201, as well as against the euro, with a 0.3% fall at 89.90 pence per euro EURGBP= .
Japan reported its steepest drop in exports in more than a decade and cratering factory activity. The Japanese yen JPY= was down 0.3% at 107.800 per dollar. The risk-sensitive Aussie AUD=D3 was last at $0.6568 down 0.4%. The dollar also rose 0.1% against the yuan in onshore trade CNY= to 7.0973.