You are here
Aussie and Kiwi dollars lead gains; US dollar falls
THE New Zealand and Australian dollars surged ahead on Monday, while the US dollar fell, edging away from last week's two-and-a-half-week highs, as fears of a second wave of Covid-19 did little to dampen investors'risk appetite.
The World Health Organization (WHO) reported a record increase in global novel coronavirus cases on Sunday. The biggest rise in cases was in North America and South America.
Francesco Pesole, FX strategist at ING, said that the impact of Covid-19 infections data on market sentiment depended on the extent to which new cases led to tighter lockdown measures.
"If markets start to make the connection that more cases will automatically imply new lockdowns then obviously it will get much more sensitive to any new peak in terms of second wave," he said.
Riskier currencies led the gains in early London trading, with the Australian dollar up 0.6 per cent at 0.6873 versus the US dollar, having hit a session high of 0.6893 shortly after 0900 GMT.
The New Zealand dollar hit a session high of 0.6457 around 0900 GMT, up around 0.7 per cent on the day.
The move was spurred by Reserve Bank of Australia (RBA) governor Philip Lowe saying that the currency's recent rise was not a problem and that the impact of the Covid-19 pandemic would not be as bad as first feared.
The Reserve Bank of New Zealand may be less relaxed about currency appreciation than the RBA, ING's Mr Pesole said.
Both the Aussie and Kiwi dollar have returned to their level of strength from before the March crisis.
Against a basket of currencies, the US dollar fell gradually in overnight trading and extended these falls in early London trading. It was at 97.39 at 1040 GMT, down 0.3 per cent on the day.
US dollar short positions increased in the week to June 16, according to weekly futures data, indicating broader market optimism about an economic recovery.
The safe-harbour yen was little changed, at 106.88 per US dollar, not far from a one-month high of 106.58 hit earlier in June.
The euro was up 0.3 per cent versus the US dollar, at 1.1216, rising off recent two-and-a-half-week lows.
EU leaders agreed on Friday that urgent action was needed to haul their coronavirus-hit economies from the deepest recession since World War Two, but made no progress on a massive stimulus plan that has divided them for weeks. REUTERS