FOREX-Dollar falls after Fed's corporate bond announcement spurs risk-on move

(New throughout)
By Kate Duguid
NEW YORK, June 15 (Reuters) - The U.S. dollar fell on Monday
afternoon after the Federal Reserve announced it would buy
individual corporate bonds in the secondary market, sparking a
risk-on move that sent U.S. stocks higher and safe-haven assets
like the U.S. dollar lower.
The Fed said it will start purchasing corporate bonds on
Tuesday through the secondary market corporate credit facility
(SMCCF), one of several emergency facilities recently launched
by the U.S. central bank to improve market functioning in the
wake of the coronavirus pandemic. The central bank will use an
indexing approach when making purchases, aiming to create a
portfolio that is based on a broad, diversified market index of
U.S. corporate bonds. The U.S. dollar index =USD fell 0.47% in North American
afternoon trade to 96.73. Against the euro EUR= the dollar was
0.52% weaker to $1.131 and against the pound GBP= it was 0.36%
weaker to $1.259. Against the Japanese yen JPY= , another
traditional safe-haven, the dollar was flat at 107.33 yen to the
dollar.
"The turn that you've seen with the dollar coincided with
the Fed's announcement about creating an index to buy a
portfolio of bonds. The market took that as a risk-on signal and
you saw Treasury yields rise on the back of that. And that
coincided with a bit of a risk-on move in currencies as well.
So, the dollar changed trajectory from earlier in the day," said
Charles Tomes, portfolio manager at Manulife Asset Management.
In overnight trade, risk assets had fallen over rising fears
of a second wave of coronavirus infections, which had lifted the
dollar. After spending the day in negative territory, the S&P
500 index .SPX rose, last up 0.26%.
China reintroduced restrictions in some areas after Beijing
reported its biggest cluster of new infections since February.
In the United States, more than 25,000 new cases were reported
on Saturday alone. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
ANALYSTS' VIEW-Market jitters over second COVID-19 wave are an
overdue pullback ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>