FOREX-Dollar slips as risk appetite returns to market

(New throughout; changes dateline, previous LONDON)
By Kate Duguid
NEW YORK, April 14 (Reuters) - The dollar fell on Tuesday as
risk sentiment returned to market following better-than-expected
economic data from China which painted a less gloomy picture
than feared following the coronavirus epidemic there.
China's March exports fell 6.6% from a year earlier,
compared with a forecast for a 14% drop, while imports fell by
less than 1%, compared with a 9.5% drop predicted by economists.
"The dollar has retained a moderate softening bias amid a
context of risk-on positioning and with global markets returning
to full participation following the long weekends in many
financial centres in Europe and Asia-Pacific. Chinese trade data
for March provided bullish fodder for stock markets in Asia by
showing an abatement in the rate of decline in imports and
exports after the severe plunges in January and February," wrote
analysts at Action Economics.
Daily fatalities in the United States also fell sharply and
states began making plans to reopen their economies, leaving
traders to abandon the safety net of the highly liquid dollar
and turn to riskier currencies.
The dollar index, which measures the U.S. currency against a
basket of six rivals, fell 0.4% in North American trade to
98.99. Against the euro EUR= , the dollar weakened by 0.5% to
$1.097.
The Australian dollar, which is sensitive to Chinese demand
because of the country's dependence on raw materials exports,
rose to a more than one-month high of 0.643 per U.S. dollar
AUD=D3 but had retraced some of those gains to last trade at
0.641.
The Japanese yen rose versus the greenback to a two-week
high of 107.20 yen JPY= .
"The ongoing improvement in global investor risk sentiment
in the near-term combined with the Fed's aggressive policy
response is beginning to weigh down more on the U.S. dollar,"
said Lee Hardman, currency analyst at MUFG.
The mood in the forex markets was pre-empted by leveraged
funds, whose net short U.S. dollar positioning in the latest
week touched its largest level since May 2018, according to
calculations by Reuters and U.S. Commodity Futures Trading
Commission data released on Friday.
The value of the net short dollar position was $10.5 billion
in the week ended April 7, from net shorts of $9.9 billion the
previous week. Speculators have been short on the U.S. dollar
for four consecutive weeks. week, the U.S. Federal Reserve rolled out a $2.3
trillion effort to bolster local governments and small and
mid-sized businesses in its latest move to keep the U.S. economy
intact as the country battles the coronavirus pandemic.
The Fed's latest efforts have added to current dollar
weakness, analysts say.

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