Dollar eyes multi-week lows as risk assets rally
By Stanley White
TOKYO (Reuters) – 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.
Traders in Asia are focused on whether China’s yuan can extend gains against the greenback as investors of all stripes shift funds to increase positions in Chinese stocks.
Lingering worries about the spread of the coronavirus 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 0.9384 Swiss franc on Thursday in Asia, close to the lowest in almost four months.
Against the euro (EUR=), the dollar was quoted at $1.1334, close to a three-week low.
The greenback was also close to a three-week low against the pound , last trading at $1.2614.
Sterling held steady at 89.86 pence per euro (EURGBP=D3).
The dollar was little changed at 107.32 yen .
Asian stocks rose on Thursday in a sign that financial markets are following gains in the tech-heavy Nasdaq (IXIC) to a record closing high on Wednesday.
A light event calendar in Asia on Thursday could keep some currency pairs in tight ranges, but analysts said sentiment favours more dollar declines as investors try to look past a recent spike in coronavirus cases in some countries.
The coronavirus pandemic is a global phenomenon, but success in containing the virus varies greatly from region to region, which has discouraged some investors from taking big positions before the traditional summer holiday season.
Elsewhere in currencies, the Australian dollar rose to $0.6990, approaching its strongest level in a month.
The New Zealand dollar was little changed at $0.6578, also close to a one-month high.