CURRENCIES

US dollar falls, riskier currencies gain

London

THE US dollar fell on Monday while European shares and riskier currencies gained, with some analysts attributing the pickup in sentiment to US regulators approving a treatment for Covid-19 patients ahead of the Republican National Convention.

More than 800,000 people around the world have died from the coronavirus, with the death toll in the United States alone surpassing 170,000. On Sunday the country granted "emergency use authorisation" for treatment using the blood plasma of patients who have recovered from the disease.

Asian shares strengthened overnight and European indexes opened higher. Riskier currencies such as the Norwegian krone, British pound and Aussie and Kiwi dollars rose versus the US dollar.

The dollar was little changed overnight but fell as markets opened in Europe, down around 0.2 per cent at 92.972 by 1053 GMT.

It has lost 0.5 per cent against the basket of currencies so far this month, consolidating losses after falling 4 per cent the month before.

Derek Halpenny, MUFG's head of research, said that the announcement about blood plasma treatment was likely to have only a short-term impact on sentiment.

"I think investors generally will be relatively sceptical of the news especially coming from Trump between now and the election," he said.

"There's obviously a very significant incentive for him to speed up the approvals or big up the emergence of some good news. I think the markets are still relatively positioned for a vaccine being done and dusted by year-end and gradually rolled out in the first half of 2021," he added. "I think it would take a lot for the markets to price in something more rapid than that." In a data-light day, market participants are awaiting the start of the four-day Republican National Convention, at which US President Donald Trump will seek to reboot his struggling election campaign.

The euro was up around 0.3 per cent versus the dollar, at US$1.183.

Last week, the dollar outperformed the euro for the first time since mid-June, as US business activity improved while European business surveys showed the economic recovery faltering.

The Australian dollar was up 0.5 per cent versus the greenback at 0.719, little affected by the country's treasury saying that effective unemployment will climb above 13 per cent. REUTERS

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