Dollar falls as yuan leads charge in risk-on trades

Tokyo, The dollar fell against most currencies on Thursday as a rally in riskier assets such as global equities and commodities put a dent in safe-haven demand for the U.S. currency.

 

China’s yuan rose to a four-month high against the greenback, extending recent gains as investors of all stripes increase positions in Chinese stocks due to growing signs of a recovery in the world’s second-largest economy, according to Reuters.

 

Lingering worries about the spread of the coronavirus could keep some currency pairs in a tight range, but the dollar’s losses are gradually increasing as sentiment favors riskier bets on long-term economic growth.

 

“Rising stocks and a dip in Treasury yields are slight negatives for the dollar, but the market can’t move too far because we still have to worry about the virus,” said Minori Uchida, head of global market research at MUFG Bank.

 

“A lot of major U.S. economic data have been positive, so this will be less of a trading factor going forward. People are looking for cues from stocks, yields, and hedging costs.”

 

Against the euro EUR=, the dollar fell 0.3% to $1.1365, reaching a one-month low.

 

The euro could get a further boost later in the day as Germany is scheduled to release export data. Economists expect shipments from the euro zone’s largest economy to rebound sharply in May from a large decline in the previous month.

 

The greenback also fell to a three-week low against the pound GBP= at $1.2637.

 

Sterling edged up to 89.97 pence per euro EURGBP=D3.

 

Source: Bahrain News Agency