Dollar creeps higher as virus worries return

By Administrator_India

Capital Sands

The dollar found a footing on Wednesday as investors returned to safe-havens, unwinding some risk currency gains made on hopes the coronavirus crisis in Europe and New York was slowing.

The greenback rose on most majors besides the safe-haven Japanese yen, a day after suffering its worst drop against a basket of currencies in nearly two weeks.

Safe-haven gains were slight but gathered pace in morning trade as the two-day rally in Asia’s equity markets lost steam and bonds and gold firmed.

The U.S. currency rose most against the risk-sensitive Australian and New Zealand dollars, gaining about 0.5% on each to sit at $0.6142 per Aussie and $0.5951 per kiwi.

Improvement has been based on less-bad statistics coming out of various parts of the world but our view is that markets are going to remain choppy – we can’t expect an uninterrupted flow of singularly good or singularly bad news.

The dollar edged 0.1% lower to 108.55 yen. It rose a fraction against the British pound to $1.2321 and euro to $1.0878.

The Aussie was also knocked by ratings agency S&P downgraded the outlook on the sovereign AAA rating from stable to negative.

Across the Atlantic, British Prime Minister Boris Johnson, who has the illness, is in intensive care for a second night although his condition is stable.

Elsewhere in Europe, Spain’s daily toll of coronavirus deaths rose for the first time in five days, but officials there and across the continent pushed forward with plans to begin lifting some lockdown measures soon.

In Asia, the dollar rose 0.5% against the Korean won and lifted from a three-week low against the Chinese yuan – rising 0.1% to 7.0730 yuan in offshore trade.

Investors are keenly watching as lockdowns lift in Wuhan, China, the epicentre of the pandemic, for clues as to how the rest of the world may fare when the worst has passed.

Authorities are walking a fine line between allowing greater freedom of movement and preventing a second wave of infection, with particular concern people who show no symptoms but can still pass on the virus.

Later on Wednesday, the U.S. Federal Reserve releases minutes from its emergency meeting last month, which may include more commentary on the depth of the economic contraction that looms.

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