(New throughout)
By Kate Duguid
NEW YORK, May 11 (Reuters) - The dollar, which typically
functions as a safe-haven investment, rose on Monday even as
investors added risk to their portfolios, buying U.S. stocks and
selling Treasury bonds.
Investors had mixed risk expectations, with an eye on
warnings of a second wave of COVID-19 infections as more
countries eased lockdown restrictions.
Germany reported on Monday that new coronavirus infections
were accelerating exponentially after early steps to ease its
lockdown, news that sounded a global alarm even as businesses
ranging from Paris hair salons to Shanghai's Disneyland
re-opened. South Korean infections also rebounded to a one-month
high. Japan said on Monday it could end its state of emergency in
many regions this week and New Zealand said it could ease
restrictions on Thursday. The UK has also set out plans to ease
the lockdown, while in France shops re-opened on Monday.
"Market concerns of re-opening the economy too quickly
resulting in another wave of the virus should continue to keep
investors cautious," wrote analysts at Action Economics.
However, "It's not a classic risk-off environment," said
Axel Merk, president and chief investment officer at Merk
Investments.
On one hand, Merk noted, there is evidence of a risk-off
move. The dollar index =USD , which measures the currency
against a basket of six rivals, was 0.37% stronger on Monday at
100.16. The Swiss franc, another safe haven, rose against the
euro EURCHF= to a more-than two-week high.
Meanwhile, the Japanese yen, a classic safe-haven bet, was
broadly weaker. Against the dollar, the yen JPY= was last down
0.93% at 107.62 and was also 0.69% weaker against the euro
EURJPY= , at 116.38. Prices of U.S. Treasury bonds, which are
also high-quality assets that benefit in times of crisis, fell
and yields rose as demand sank.
U.S. stocks also benefited on Monday from improved risk
sentiment, though some of that move had been retraced by the
close, with the S&P 500 index .SPX flat.
The euro fell against the dollar and was last down around
0.26% at $1.081 EUR= .
The dollar this week will take its cues from Federal Reserve
Chair Jerome Powell's speech on Wednesday and inflation, jobless
and retail spending data, according to Joe Manimbo, senior
market analyst at Western Union Business Solutions.
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