Dollar gains versus yen, Swiss franc as US stocks bounce back

New York

THE US dollar rose against the safe-haven Japanese yen and Swiss franc on Friday as stocks on Wall Street rallied from their worst one-day performance in three months, while the euro dropped against the greenback, erasing early gains.

The yen fell against the dollar for the first time in five sessions, while the Swiss franc declined, as Wall Street rallied to claw back some of the sharp losses suffered in the prior session.

This week, investors are bracing for a number of key events, including discussions on the European Union recovery fund, Brexit negotiations, Bank of England and Swedish National Bank meetings. Federal Reserve chair Jerome Powell's semi-annual testimony to the Senate banking committee is also scheduled.

"There has been a paring back of bearish bets on the dollar," said Joe Manimbo, senior market analyst, at Western Union Business Solutions in Washington.

Hopes of a post-Covid-19 global recovery, the easing of US-China trade tensions and the prospect of capped long-term yields in the US had weighed on the dollar, pushing it lower against most major currencies, before it strengthened.

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In afternoon trading, the dollar rose 0.6 per cent against the yen to 107.455 yen. That said, the dollar still posted its worst weekly performance against the yen since late March.

Against the Swiss franc, the dollar surged 1.2 per cent to 0.9551 franc.

The euro fell 0.6 per cent to US$1.1228, sliding from US$1.1422, the three-month high it reached on Wednesday.

The dollar index, meanwhile, climbed 0.5 per cent to 97.33, after earlier hitting a one-week high.

The British pound weakened on data showing that Britain's economy shrank by a record 20.4 per cent in April from March as the country spent the month in a tight novel coronavirus lockdown. Investors saw the number as likely the bottom of the crash before what is expected to be a long and slow recovery.

Sterling was last down 0.9 per cent at US$1.2487 and was slightly lower versus the euro. In the afternoon session, the euro rose 0.2 per cent to 89.92 pence. REUTERS