In early London trading, the United States dollar reversed some of its overnight losses. There is also a rising number of coronavirus cases which is keeping the mood in check. Along with that, there are fears of a second wave of the pandemic that takes the shine off the improving economic data.
On Sunday, the global death toll from COVID-19 reached half a million. This is according to a Reuters tally. Cases surged in Western and Southern U.S. states. This prompted California to order some bars to close in the first significant rollback of efforts to reopen the economy.
Profits in China’s industrial firms raised for the first time in six months in May. This suggests the country’s economic recovery is gaining traction. Nevertheless, the news did little to support oil prices.
Versus the dollar, the safe-haven Japanese yen rose, with little clear direction across the FX market. This was before the yen suddenly changed track. Moreover, other riskier currencies also gained.
Dollar and Others
Versus the United States dollar, the Australian dollar was up by 0.3% at 0.6884. This happened even after the country reported its most significant one-day rise in new coronavirus infections in more than two months.
Versus the United States dollar, the New Zealand dollar also rose by 0.3% at 0.6683.
Lee Hardman and Derek Halpenny are MUFG strategists. They wrote in a note to clients that the alarming spread of COVID could soon become evident in consumer confidence data. Moreover, they added that the re-imposition of restrictions could start to impact consumer discretionary stocks. Thus, this could trigger a more explicit risk-off move.
At 0734 GMT, the dollar was at 97.303 against a basket of currencies, down by -0.2% on the day and overall more than 1% this month. It has been on track for its biggest monthly fall past December.
ING strategists told clients that the dollar could be supported by month-end portfolio rebalancing on Tuesday.