FOREX-Dollar weak vs. euro; Trump news conference on China on tap – Reuters

NEW YORK (Reuters) – The dollar extended its slide against a surging euro on Friday, hurt by month-end flows and as the common currency continued to enjoy a boost from the European Union’s recently announced plan to prop up the bloc’s coronavirus-hit economies with a 750 billion-euro ($828 billion) recovery fund.

FILE PHOTTO: Rolled Euro banknotes are placed on U.S. Dollar banknotes in this illustration taken May 26, 2020. REUTERS/Dado Ruvic/Illustration

The dollar, a safe-haven currency, found some support as traders awaited U.S. President Donald Trump’s response to China’s tightening control over Hong Kong, which could worsen tensions between the two powers over the financial hub.

The euro EUR= was 0.32% higher at $1.1112, on pace for its fourth straight day of gains. The euro’s rally this week has pushed it over its 200-day moving average for the first time since late March and lifted it about 2% for the week, its best weekly gain in nine weeks.

Much of the euro’s move was driven by optimism generated by the European Commission’s stimulus plan announced earlier this week, as well as investors’ improved appetite for risk-taking as global economies gradually move to reopen after coronavirus-linked shutdowns, analysts said.

Month-end adjustments to portfolio hedges, after a more than 3% rally in May for U.S. stocks, was also weighing on the dollar, said Stephen Innes, chief global markets strategist at AxiCorp.

“The 3%-plus jump in equities this month suggests a medium-sized USD sell program into month-end,” said Innes.

The euro was also helped by data that showed inflation continued to slow on crashing oil prices but underlying price growth held steady, a hopeful sign for European Central Bank policymakers trying to stave off deflation.

With Trump due to announce later on Friday his response to the Chinese parliament’s advancement this week of security legislation for Hong Kong – which many lawyers, diplomats and investors fear could erode the city’s freedoms – the dollar’s losses were limited.

“I think the market is still fearful that it might escalate into something more serious. If he was serious with trade tariffs, that would have a meaningful impact”, said Moh Siong Sim, a currency strategist at Bank of Singapore.

The pound GBP= was about flat against the euro and the dollar ahead of a new round of Brexit talks next week.

Reporting by Saqib Iqbal Ahmed; additional reporting by Julien Ponthus and Tom Westbroolk; editing by Jonathan Oatis

Let’s block ads! (Why?)

Scalping Strategy Course (DVD + Online) - $299.00

In the much anticipated Forex Scalping Strategy Course, Vic and Sarid show you short-term focused techniques and strategies to make quicker profits while reducing market exposure.

Forexmentor Coach's Corner First Month (Online) - $149.00

The Coach's Corner offers 2 live sessions per week, an integrated approach to trading, FREE access to the VicTrade video course and Darko's Pattern Trading Video Lessons.

Source link

Have your say