Dollar bides time as COVID-19 spread revives global growth anxiety

CEYLON TODAY | Published: 2:00 AM Jul 9 2020

The dollar held onto gains on Wednesday as a resurgence of the coronavirus in the United States and the return of lockdowns in some countries boosted safe-haven demand for the U.S. currency.

Risk sentiment was also undermined after Federal Reserve officials expressed concern that rising coronavirus cases could harm economic growth just as stimulus measures start to expire.

The yuan fell slightly against the dollar, halting a two-day rally, after the Chinese central bank’s daily midpoint for the currency was set at a weaker than expected level.

Other Asian currencies straddled narrow ranges as a resurgence of coronavirus cases threatened a return of lockdown restrictions, leaving investors fretting about the mounting economic costs of the pandemic.

“The mood changes day by day, but the dollar looks to be supported for now as investors turn more cautious about the virus,” said Yukio Ishizuki, foreign exchange strategist at Daiwa Securities.

“The Fed’s comments on the economy sound sombre. There’s reason to worry because it is hard to see when the virus will be brought under control.”

The dollar traded at 107.67 yen in Asia on Wednesday following a 0.3% gain on Tuesday.

Against the euro, the dollar was quoted at $1.1274, also holding to a 0.3% gain from the previous session.

The greenback bought 0.9429 Swiss franc, little changed on the day.

Sterling changed hands at $1.2549 and was quoted at 89.86 pence per euro.

The pound was near three-week highs against both the greenback and the common currency after British Prime Minister Boris Johnson reiterated his commitment to reaching an early trade deal with the European Union.

However, some traders remain reluctant to buy the pound because there is still a risk that trade talks could fail to yield an agreement.

(Reuters)


CEYLON TODAY | Published: 2:00 AM Jul 9 2020

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