Dollar slips as investors focus on recovery outlook

Monday,   01-Jun-2020   09:00 AM (IST)

The dollar slipped on Monday as investors looked past unrest in the United States to the global economic recovery from the coronavirus and hoped for an easing in Sino-U.S. tensions. The risk-sensitive Australian dollar AUD=D3 shrugged off early pressure and gained 0.4% to hit a three-month high of $0.6703. The euro was firm and sterling tested a three-week high. The kiwi NZD=D3 and the oil sensitive Canadian dollar and Norwegian krone all rose about 0.3%, even as oil prices eased. Data on Sunday painted a mixed picture of China’s recovery, with momentum gaining in the construction and services sector even as factory activity growth slowed a touch. Against a basket of currencies =USD the dollar had its worst month this year in May and was under pressure on Monday, dipping by a fraction to 98.166. At-times violent demonstrations against police brutality in the United States, which weighed on the mood in early trade and perhaps capped further gains, were unlikely to move the dial on the outlook for the U.S. economy, Capurso said. What began as peaceful demonstrations over the death of George Floyd, who died as a white Minneapolis police officer knelt on his neck, has become a wave of outrage that has many cities braced for another night of violence. Stocks dipped on unrest rippling across the country. But currencies seemed to carry over the tone from last week, which ended with relief that U.S. President Donald Trump made no move to junk the Phase 1 with China. Relations between Beijing and Washington have nosedived through the COVID-19 pandemic, but investors were relieved that Trump’s move did not - so far - escalate tension over Hong Kong into a broader trade dispute. The Chinese yuan CNH=D3, which had firmed sharply on Friday, was steady near where it left off at 7.1367 per dollar. The euro held steady at $1.1118, just below a two-month high of $1.1145 hit on Friday as investors drew confidence from the European Union's plans for a coronavirus recovery fund. The pound GBP= rose 0.3% to $1.2379, close to a three-week peak hit on Friday, as Britain moves out of lockdown. Competitive sport can resume from Monday, the government said on Sunday.