Dollar loses safe-haven shine, sends euro to 11-week high

June 2, 2020

LONDON (June 2) - The euro reached an 11-week high on Tuesday as the dollar lost ground, with investors maintaining their hopes for a global economic recovery.

The optimism persisted within markets despite growing concern over U.S.-China tensions and mass protests across the United States over the death of a black man in police custody.

Traders remain hopeful that central banks will continue to buy government bonds and other financial assets to protect their economies from the coronavirus pandemic.

The European Central Bank, for instance, is expected to increase its 750 billion-euro Pandemic Emergency Purchase Programme, or PEPP, on Thursday, probably by around 500 billion euros.

The Bank of Japan, ECB and the Federal Reserve have increased their balance sheets by 10%, 20% and 70% respectively since the start of this year, said Kit Juckes, macro strategist at Societe Generale.

The euro last fetched $1.1178, up 0.4% on the day , after rallying to $1.1185, its highest since March 17.

The U.S. dollar fell to a three-month low of 1.3503 against the Canadian dollar and was last trading down 0.4% . It also fell against the Australian dollar, which rose to $0.6852, its highest since Jan. 24.

The safe-haven Japanese yen fell 0.1% versus the dollar to 109.71.

“The strengthening of the commodity-linked currencies and the weakening of the safe havens suggest that investors’ appetite remained supported for another day,” said Charalambos Pissouros, senior market analyst at broker JFD Group.

“It seems that investors continued placing bets on the prospect of a global economic recovery as governments around the globe continue to ease their lockdown measures,” Pissouros said.

The U.S. dollar index against a basket of six major currencies fell to its weakest since mid-March, at 97.44, before settling in neutral territory at 97.82.


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