Dollar rises against yen, euro as nervous investors seek safety

he dollar rose on Monday against the Japanese yen and the euro as investors worried that economic recovery might be slower than hoped and sought the safety of the U.S. currency.

Safe-haven appeal boosted the dollar against its major peers in the New York morning as investors adjusted their risk expectations with an eye on warnings of a second wave of COVID-19 infections as more countries eased lockdown restrictions.

Germany reported on Monday that new coronavirus infections were accelerating exponentially after early steps to ease its lockdown, news that sounded a global alarm even as businesses opened from Paris hair salons to Shanghai Disneyland. South Korea also saw infections rebound to a one-month high.

Japan said on Monday it could end its state of emergency in many regions this week and New Zealand said it could ease restrictions on Thursday. The UK has also set out plans to ease the lockdown while in France shops re-opened on Monday.

Some risk assets including U.S. stocks were boosted last week on cautious optimism about an economic recovery, but that attitude has been hard to maintain, said Joe Manimbo, senior market analyst at Western Union Business Solutions.

“Sustaining optimism has proven a tough task after last week’s unprecedented U.S. employment report that showed a record loss of more than 20 million jobs in April which pushed unemployment to nearly 15%, the highest since the Great Depression. Expectations that unemployment could top 20% in the months ahead dampened hopes of a strong recovery over the latter half of the year, buoying the greenback.”

Against a basket of six rival currencies, the dollar was last up 0.31% at 100.1. The safe-haven Japanese yen hit a 15-day low versus the dollar, down around 0.82%, after a U.S. buyer bought a large amount of dollar-yen, forcing the pair above 107.

The euro fell against the dollar, though had retraced some of that move mid-morning, last down around 0.19% at $1.082 .

The dollar this week will take its cues from Federal Reserve Chair Jerome Powell’s speech on Wednesday, and inflation, jobless and retail spending data, according to Manimbo.

Also weighing on global risk sentiment is the prospect of worsening tensions between the United States and China.

A conciliatory phone call between U.S. and China trade negotiators on Friday staved off fears of an imminent new round of U.S. tariffs. But U.S. President Donald Trump said he was “very torn” over whether or not to end the preliminary Phase 1 trade deal between the two countries.


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