The U.S. dollar declined in Asian trade on Monday. Investors were waiting for economic data from around the world along with U.S. corporate earnings. They wanted to gauge whether the markets’ guarded optimism on the economic outlook is justified.
On Friday, the greenback had ended its third week of losses as traders bought into risk-sensitive currencies on bets that the worst of the pandemic’s impact was over.
The dollar index lowered by 0.2% to 96.452 against a basket of major currencies in early Monday trade. U.S. coronavirus cases rose over the weekend, as Florida announced an increase of more than about 15,000 new cases in the last 24 hours.
Yukio Ishizuki, the senior currency strategist at Daiwa Securities, stated that rising coronavirus cases are not positive. However, at the moment, FX markets seem to think that there is still some time before an overflow of the medical system will force them to put restrictions on the economy.
Furthermore, hopes for the development of drugs and vaccines for the infection are also supporting risk sentiment along with economic indicators that have so far shown recovery from lockdowns.
Masafumi Yamamoto, the chief currency strategist at Mizuho Securities, noted that markets had seen a rapid rebound after a rapid decline in sources of various economic data. However, looking ahead, the improvement could slow or even deteriorate, given the second round of infections.
In Australia, a weekly gauge of consumer confidence has lowered after a spike in infections in Melbourne. The same is happening in the United States, where the magnitude of the outbreak is much larger. U.S. consumer inflation figures for June are due on Tuesday. Retail sales, a key gauge of consumption, will be released on Thursday.
How did the Euro and Sterling fare?
The euro soared by 0.25% to $1.1329, maintaining its slow climb since late last month. The British pound also jumped by 0.3% to $1.2656, edging near its three-week high of $1.2668 touched last week.
Meanwhile, the Australian dollar gained 0.3% to $0.696. The Chinese yuan grew by 0.15% to 6.9987 per dollar in the early trade.