* Euro, sterling, fall vs dollar
* Biggest move in Chinese yuan vs dollar
* U.S. factory orders drop more than expected
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Adds new comment, cross-currency basis swap levels, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, May 4 (Reuters) - The U.S. dollar gained on Monday, bolstered by safe-haven flows as risk
appetite waned amid fears that last year's U.S.-China dispute will be reignited, this time over the novel
coronavirus.
U.S. President Donald Trump and Secretary of State Mike Pompeo have pinned the blame for the pandemic
on China, where the coronavirus outbreak is believed to have originated.
The latest salvo came on Sunday from Pompeo, who said there was "a significant amount of evidence"
that the virus emerged from a laboratory in the central Chinese city of Wuhan. Analysts were debating how the United States might seek to retaliate, with more trade tariffs or
canceling the payments on U.S. Treasuries that China owns. They all agreed the FX market overall would see
higher volatility.
Erik Bregar, head of FX strategy at Exchange Bank of Canada, said he is closely watching for signs
"of a U.S.-China Trade War 2.0 and the possibility for another U.S. dollar funding squeeze."
In afternoon trading, the dollar index was up 0.3% at 99.529 =USD , rising for a second straight day.
The dollar also extended gains after data showed new orders for U.S.-made goods fell more than
expected in March, dropping 10.3%. Economists polled by Reuters had forecast factory orders tumbling 9.7%
in March. The euro fell 0.7% to $1.0907 EUR=EBS , while sterling slid 0.3% to $1.2441 GBP=D3 .
"Many investors are getting skeptical about the rebound we saw in risk appetite since the March 23rd
low in stocks," said Ed Moya, senior market analyst at OANDA in New York.
"You'll see investors become extremely conservative and we'll see a steady stream of safe-haven flows,
which should benefit the dollar."
With U.S.-China tension brewing, the Chinese yuan fell to a six-week low of 7.1555 against the dollar
in the offshore market CNH=EBS . The dollar was last little changed at 7.1334, but if the yuan falls
again, the next levels to watch would be the mid-March low of 7.1651 and early-September trough of 7.1975.
Dollar liquidity in the euro and yen FX swap market also showed a little more pressure on Monday,
after weeks of steady U.S. currency supply that suggested less of a funding squeeze.
The euro/dollar three-month swaps widened on Monday to -50 basis points EURCBS3M=ICAP , after hitting
a premium of 60 basis points in favor of the euro in early April.
The yen/dollar three-month swaps also widened to about -9.250 basis points JPYCBS3M=ICAP , after
hitting positive premiums in favor of the Japanese currency early last month.
The numbers suggested that exchanging the yen and euro to U.S. dollars is getting a little more
expensive in the swap compared to rates seen last month.
The dollar, however, fell against the yen, another safe-haven currency, trading 0.2% lower at 106.72
yen JPY=EBS .
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Currency bid prices at 3:09 PM (1909 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.0905 $1.0983 -0.71% -2.72% +1.0980 +1.0896
Dollar/Yen JPY= 106.7200 106.9300 -0.20% -1.97% +107.0600 +106.6800
Euro/Yen EURJPY= 116.40 117.39 -0.84% -4.55% +117.3900 +116.3800
Dollar/Swiss CHF= 0.9653 0.9612 +0.43% -0.26% +0.9662 +0.9614
Sterling/Dollar GBP= 1.2441 1.2502 -0.49% -6.17% +1.2502 +1.2406
Dollar/Canadian CAD= 1.4076 1.4084 -0.06% +8.39% +1.4151 +1.4051
Australian/Doll AUD= 0.6427 0.6418 +0.14% -8.47% +0.6433 +0.6373
ar
Euro/Swiss EURCHF= 1.0527 1.0552 -0.24% -2.98% +1.0563 +1.0525
Euro/Sterling EURGBP= 0.8764 0.8783 -0.22% +3.67% +0.8814 +0.8761
NZ NZD= 0.6047 0.6067 -0.33% -10.23% +0.6062 +0.6009
Dollar/Dollar
Dollar/Norway NOK= 10.3061 10.2090 +0.95% +17.40% +10.4740 +10.3086
Euro/Norway EURNOK= 11.2440 11.3550 -0.98% +14.29% +11.4649 +11.2430
Dollar/Sweden SEK= 9.8467 9.8391 -0.65% +5.34% +9.9395 +9.8131
Euro/Sweden EURSEK= 10.7391 10.8095 -0.65% +2.58% +10.8689 +10.7336
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Chinese yuan falls to lowest in 6 weeks vs dollar IMAGE https://tmsnrt.rs/3dcQovL
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