Dollar falls as focus shifts to recovery prospects
The dollar fell against most Asian currencies on Wednesday as prospects of more government stimulus and a global economic recovery emboldened investors to step up holdings of riskier assets.
The Australian dollar hit a five-month high against the dollar, as funds headed toward economies that are seen to be recovering the fastest from the coronavirus pandemic.
The Aussie, which has benefited from signs its economic downturn may be less severe than initially feared, could get an additional boost if first-quarter gross domestic product data due later on Wednesday shows the country dodged a contraction.
China’s yuan is also in focus before the release of services sector data from the world’s second-largest economy, which could bolster expectations for economic recovery.
The Australian dollar rose early in Asian trading to $0.6930, the highest since Jan. 7.
Across the Tasman Sea, the New Zealand dollar jumped to $0.6391, the highest since March 9.
The greenback also slumped to a one-month low of $1.2584 against the British pound.
The Aussie continued to draw buyers after the Reserve Bank of Australia on Tuesday focused on the prospects for a speedy recovery from the coronavirus shock.
Traders will also monitor the yuan’s opening in onshore trade and the release of China’s services PMI for May.
The coronavirus first emerged in China late last year, but it is also the first major economy to ease severe lockdown restrictions, meaning it is likely to recover earlier than other countries.
The greenback’s fortunes against other safe-haven currencies were mixed.
The dollar bought 0.9619 Swiss francs, close to a two-month low.
However, the U.S. currency briefly rose to a two-month high of 108.40 yen, threatening to break out of its recent trading range.
U.S. President Donald Trump has threatened to use the military to quell spreading protests against racism and police brutality, but U.S. stocks continue to rally, leaving some currency traders groping for direction.
The euro bought $1.1180 on Wednesday in Asia, close to the highest since March 16, on hopes policymakers will support the euro zone’s weakest economies.
The ECB scooped up all of Italy’s new debt in April and May but merely managed to keep borrowing costs for the indebted, virus-stricken country from rising, data showed on Tuesday.