Euro set for seventh day of gains

London

THE euro topped an 11-week high on Wednesday, on track for a seven-day winning streak, and the US dollar fell against most currencies as the prospects of more stimulus and hopes for economic recovery led investors to buy riskier assets.

Overnight euro implied volatility gauges jumped to 12 per cent, their highest in one month, suggesting that traders were preparing for moves bigger than usual in the common currency.

The Australian dollar hit a five-month high of 0.6982 against the US dollar, as funds sought exposure to economies expected to make the fastest recoveries from the coronavirus pandemic.

The US dollar also fell against the British pound, the Norwegian and Swedish crowns, and the Canadian dollar as mass protests against racism across the United States weighed on the currency.

An index of the US dollar against six major currencies fell to nearly a three-month low of 97.28.

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"The strengthening of the risk-linked Aussie and Kiwi, combined with the weakness of the safe-havens dollar, yen, and franc, suggests that investors continued increasing their risk exposures for another day," Charalambos Pissouros, senior market analyst at JFD Group, said.

"It seems that investors are still looking past the US-China tensions and the civil unrest in the US," he said.

President Donald Trump has threatened to use the military to quell protests against racism and police brutality. US stocks continue to rally, however, leaving some currency traders confused about the market's direction.

Generally, traders preferred to bet on a global economic recovery.

US dollar/yen was last up 0.1 per cent at 108.79.

The euro reached an 11-week high of US$1.1125 on expectations policymakers will support the eurozone's weakest economies with debt purchases. The common currency was last up 0.4 per cent. The seven-day winning streak was the longest since December 2013.

The euro also rose against the Swiss franc to US$1.0797 , the highest since Jan 14, trading last up 0.4 per cent.

The euro disregarded a contraction in economic activity in May reported by IHS Markit's Final Composite Purchasing Managers' Index (PMI).

In addition, the number of people that lost their jobs in the euro zone in April was 211,000, bringing the number of the unemployed to 11.919 million or 7.3 per cent of the workforce, up from 7.1 per cent in March.

But investors did care about expectations that the European Central Bank will increase its 750 billion-euro (S$1.2 trillion) bond-buying programme, the Pandemic Emergency Purchase Programme, when it meets on Thursday. REUTERS