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FOREX-Dollar weakens as investors' risk appetite ramps up

Published 05/27/2020, 04:12 AM
Updated 05/27/2020, 04:20 AM
© Reuters.
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* Dollar falls vs most major currencies
* Risky currencies like Aussie dollar, Norwegian crown spike

(Updates to U.S. afternoon)
By Saqib Iqbal Ahmed
NEW YORK, May 26 (Reuters) - The U.S. dollar fell across the
board on Tuesday as optimism about a potential coronavirus
vaccine and a reopening world economy helped investors shrug off
U.S.-China tensions, sapping demand for safe-haven assets.
The U.S. Dollar Currency Index =USD , which measures the
greenback's strength against six other major currencies, traded
down 0.75% at 98.99, after slipping as low as 98.891, its
weakest since May 1.
Investors' increased appetite for risky assets sent stock
markets across the globe higher, and commodity markets rallied.
The S&P 500 index .SPX briefly rose above the 3,000 level
for the first time since March 5, as U.S. biotech corporation
Novavax Inc NVAX.O became the latest company to join the race
to test coronavirus vaccine candidates on humans and enrolled
its first participants. "The reopening of the economy, along with positive news on
the coronavirus vaccine front buoyed sentiment broadly," Ronald
Simpson, managing director of global currency analysis at Action
Economics, said in a note.
U.S.-China tensions have been simmering in the background as
Washington repeatedly criticized Beijing's handling of the
coronavirus outbreak, but investors have largely dismissed them.
On Tuesday, U.S. President Donald Trump's economic adviser
said China's plan for national security legislation on Hong Kong
was "a big mistake" and pledged Washington would pay expenses
of U.S. companies that wanted to move out of the territory or
China. Data on Tuesday showed U.S. consumer confidence nudged up in
May, suggesting the worst of the coronavirus-driven economic
slump was potentially over as the country starts to reopen.
The dollar has remained in a narrow range since the end of
March.

On Tuesday, the euro EUR= was 0.83% higher against the
greenback after the Ifo institute said German exporters
recovered somewhat in May from a "catastrophic" April.
The trade-sensitive Australian AUD=D3 and New Zealand
dollars NZD=D3 and Norwegian crown NOK=D3 each rose more
than 1% versus the U.S. dollar.
The dollar was about flat on the day against the yen JPY=
a day after Japan ended its state of emergency. The weaker greenback helped the British pound rise 1.23% to
$1.2333. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
GRAPHIC: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
GRAPHIC: Range-bound dollar https://tmsnrt.rs/36wqDV3
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