* Markets largely shrug off U.S.-China tensions
* U.S. coronavirus deaths continue to rise
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
(Recasts, adds new comment, FX table, updates prices, changes byline, dateline; previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, July 22 (Reuters) - The euro rose to its highest in nearly two years against the dollar,
while commodity currencies gained, continuing the risk-on moves that have dominated since European Union
leaders agreed on a fiscal stimulus plan on Tuesday.
Currency traders largely shrugged off U.S.-China tensions.
Risk appetite in currency markets, however, diminished for around two hours, after China's foreign
ministry said the United States had told China on July 21 to close its consulate in Houston. The move marked a further deterioration in U.S.-China relations, which have become more fraught since
the outbreak of COVID-19.
"I think the U.S.-China tension is being ignored," said Mazen Issa, senior currency strategist, at TD
Securities in New York. "To pay more deference to it now is a bit rich because we probably have seen the
most significant changes, tectonic shifts in U.S.-China relations in the last four or five months and the
market did not pay much attention to them."
The dominant mood remained optimistic, however, following the EU's agreement on a 750 billion-euro
recovery fund to share the debts incurred during the coronavirus crisis. In midmorning trading, the euro was last up 0.5% at $1.1580 EUR=EBS , after hitting $1.1601, the
highest in more than 1-1/2 years.
"I think it may well be the case that there's some leveraged players who've been closing out short
positions," said Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets.
After gaining on the U.S.-China headlines, the dollar index resumed falling and was down 0.2% at
94.939 =USD . The index fell to a low of 94.827, its weakest since October 2018.
The United States reported more than 1,000 deaths from COVID-19 on Tuesday, according to a Reuters
tally, the first time since June 10 the nation has surpassed that milestone. California was close to
passing New York in total infections. The Australian dollar was up 0.2% at US$0.7141 AUD=D3 after earlier hitting a fresh 15-month high,
while the New Zealand dollar was up 0.3% at US$0.6662 NZD=D3 , touching a six-month peak earlier in the
session.
A flare-up of coronavirus cases and the reintroduction of lockdown measures in Australia's
second-largest state had little impact on the currency, even after reports that the latest virus outbreak
will cut the country's third-quarter GDP growth by 0.75 percentage point. The Chinese offshore yuan, which weakened past 7 per dollar on U.S.-China headlines, was slower to
recover, at 6.9954 CNH=EBS .
Meanwhile, sterling fell versus the dollar GBP=D3 and euro EURGBP=D3 , driven by a report in the
Financial Times that the British government has abandoned hopes of clinching a free-trade deal with the
United States by the end of the year. Currency bid prices at 10:30AM (1430 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1571 $1.1526 +0.39% +3.22% +1.1600 +1.1508
Dollar/Yen JPY= 107.1200 106.7600 +0.34% -1.60% +107.1700 +106.7200
Euro/Yen EURJPY= 123.99 123.10 +0.72% +1.67% +124.2700 +123.0800
Dollar/Swiss CHF= 0.9310 0.9331 -0.23% -3.80% +0.9351 +0.9302
Sterling/Dollar GBP= 1.2710 1.2728 -0.14% -4.14% +1.2740 +1.2645
Dollar/Canadian CAD= 1.3432 1.3457 -0.19% +3.43% +1.3483 +1.3420
Australian/Doll AUD= 0.7140 0.7127 +0.18% +1.69% +0.7182 +0.7113
ar
Euro/Swiss EURCHF= 1.0774 1.0755 +0.18% -0.72% +1.0794 +1.0743
Euro/Sterling EURGBP= 0.9103 0.9047 +0.62% +7.69% +0.9137 +0.9051
NZ NZD= 0.6661 0.6644 +0.26% -1.11% +0.6689 +0.6634
Dollar/Dollar
Dollar/Norway NOK= 9.1300 9.1027 +0.30% +4.01% +9.1811 +9.0804
Euro/Norway EURNOK= 10.5660 10.5033 +0.60% +7.40% +10.5845 +10.4832
Dollar/Sweden SEK= 8.8717 8.8761 +0.28% -5.09% +8.9114 +8.8374
Euro/Sweden EURSEK= 10.2668 10.2380 +0.28% -1.93% +10.2755 +10.2240
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US real yield falls https://tmsnrt.rs/3eJMD1m
euro https://tmsnrt.rs/3juvg8k
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