FOREX-US dollar falls as lockdowns ease and traders turn less averse to risk

* Japanese yen rises to two-week high vs US dollar
* Australian dollar jumps to 7-week high vs US dollar
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

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By Olga Cotaga
LONDON, April 27 (Reuters) - The U.S. dollar fell across the
board on Monday as traders grew less averse to risk amid an
easing in coronavirus lockdowns in several countries.
The U.S. dollar was weaker against the Japanese yen and the
euro as investors turned more positive on Italy and saw the Bank
of Japan continuing to support an economy battered by the virus.
"The U.S. dollar has started the week on the back foot ...
It reflects more risk-on trading conditions at the start of this
week," said Lee Hardman, currency analyst at MUFG.
"Most notably, there was a sharp drop yesterday in the
reported number of COVID-19 fatalities in a number of countries
... which provides further encouragement that lockdown measures
are proving effective," Hardman said.
Credit-rating agency S&P reaffirmed on Friday Italy's BBB
rating, although many had expected a downgrade, supporting the
common currency by limiting the escalation of an economic and
political crisis on the continent. The BoJ expanded its stimulus to help companies hit by the
coronavirus crisis, pledging to buy unlimited amount of bonds to
keep borrowing costs low as the government tries to spend its
way out of the deepening economic pain. The dollar shed 0.4% of its value versus the Japanese yen to
trade at 107.11 yen JPY=EBS , having fallen earlier to a
two-week low of 107.05.
The euro was up 0.3% at $1.0848 EUR=EBS .
Traders now shift their focus to a U.S. Federal Reserve
meeting ending Wednesday and a European Central Bank (ECB)
meeting on Thursday as major central banks once again take the
stage as the global economy battles against a deep depression.
On Sunday, the Australian states of Queensland and Western
Australia said they would ease social distancing rules this week
as the number of people infected decreased, pushing the
Australian dollar to a seven-week high of 0.6469 against the
U.S. dollar AUD=D3 .
Encouraged by a fall in infection rates, Germany allowed
small retail stores to reopen. Now large corporations are
following suit. Italy will also ease lockdown measures from May 4.
These measures, alongside with more positive COVID-19 data,
has turned investors towards more risky assets and abandon the
safety of the dollar, analysts said. A Reuters index that tracks
the dollar against other major currencies fell below 100 for the
first time since Wednesday.
Some analysts believe the move came too early, since
lockdown measures are still in place and it will take time to
return to pre-COVID-19 behaviou.
Athanasios Vamvakidis, global head of G10 FX strategy at
Bank of America Merrill Lynch, remains bullish on the dollar and
thinks a recovery is some way away.
"There's a clear trade-off -- either you open up and you see
more infections and more deaths or you remain closed and you
kill your economy. It's no clear answer here, there's no right
or wrong. One thing is certain, we cannot eliminate the virus
unless we find a vaccine or a cure, and no matter what we d,o we
cannot have a strong recovery as long as this virus remains,"
Vamvakidis said.
"This is why we are a bit concerned of the market rally we
have seen in risk assets ... We're still risk-off, we still like
the dollar. We believe we still have not seen the worst off in
market correction," he said.