* 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
(Updates to midafternoon, changes byline)
By Chuck Mikolajczak
NEW YORK, July 22 (Reuters) - The euro strengthened to its highest in nearly two years against the
dollar, while commodity currencies gained as risk-on moves continue in the wake of a fiscal stimulus deal
reached by European Union leaders on Tuesday.
Currency traders largely shrugged off U.S.-China tensions, although risk appetite in currency markets
briefly diminished for about two hours, after the United States told China to close its consulate in
Houston amid spying accusations, the latest example of worsening relations between the two countries.
The mood remained largely optimistic, however, following the EU's agreement on a 750 billion-euro
recovery fund to share the debts incurred during the coronavirus crisis, with the euro up for a fourth
straight day against the greenback. "This is part of global reflation and maybe the multiyear bull market in the dollar has come to an
end," said Axel Merk, president and chief investment officer at Merk Investments in Palo Alto, California.
In afternoon trading, the euro was last up 0.37% at $1.1569 EUR=EBS , after hitting $1.1601, the
highest since October 2018.
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 March.
"The dollar is weak and the key reason for that is real interest rates in the U.S. are low and are
promised to go lower," said Merk.
The U.S. Federal Reserve is scheduled to hold a two-day policy meeting next week, in which it is
expected to keep interest rates near zero as it seeks to support an economy battered by coronavirus
lockdowns.
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$0.71425 AUD=D3 after earlier hitting a fresh 15-month high,
while the New Zealand dollar was up 0.3% at US$0.6664 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, had recouped that
level by afternoon trading, at 7.0119 CNH=EBS .
Sterling lost ground 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 and concerns the Brexit transition period will expire without a deal
between Britain and the EU. ========================================================
Currency bid prices at 3:17PM (1917 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1570 $1.1526 +0.38% +3.21% +1.1600 +1.1508
Dollar/Yen JPY= 107.2100 106.7600 +0.42% -1.52% +107.2800 +106.7200
Euro/Yen EURJPY= 124.06 123.10 +0.78% +1.73% +124.2800 +123.0800
Dollar/Swiss CHF= 0.9294 0.9331 -0.40% -3.97% +0.9351 +0.9287
Sterling/Dollar GBP= 1.2739 1.2728 +0.09% -3.92% +1.2743 +1.2645
Dollar/Canadian CAD= 1.3413 1.3457 -0.33% +3.29% +1.3483 +1.3400
Australian/Doll AUD= 0.7141 0.7127 +0.20% +1.71% +0.7182 +0.7113
ar
Euro/Swiss EURCHF= 1.0752 1.0755 -0.03% -0.90% +1.0794 +1.0743
Euro/Sterling EURGBP= 0.9080 0.9047 +0.36% +7.40% +0.9137 +0.9051
NZ NZD= 0.6662 0.6644 +0.27% -1.10% +0.6689 +0.6634
Dollar/Dollar
Dollar/Norway NOK= 9.1484 9.1027 +0.50% +4.21% +9.1811 +9.0804
Euro/Norway EURNOK= 10.5860 10.5033 +0.79% +7.58% +10.5945 +10.4832
Dollar/Sweden SEK= 8.8686 8.8761 +0.25% -5.12% +8.9114 +8.8374
Euro/Sweden EURSEK= 10.2635 10.2380 +0.25% -1.96% +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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