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FOREX-Dollar dips as virus worries persist despite some signs of hope

Published 07/04/2020, 04:37
Updated 07/04/2020, 04:42
© Reuters.

© Reuters.

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Pound on edge as Johnson enters intensive care
* Dollar grinding higher on signs coronavirus flattening
* Coronavirus pandemic roils global economy

By Stanley White
TOKYO, April 7 (Reuters) - The dollar fell against the yen
on Tuesday as U.S. stock futures erased gains and traded lower
in a sign some investors remain concerned about the economic
shock posed by the coronavirus pandemic.
The pound clawed back some recent losses against the dollar,
but sentiment for sterling remains fragile after British Prime
Minister Boris Johnson was moved to intensive care after his
coronavirus symptoms worsened.
The yen was supported against major currencies after
Japanese Prime Minister Shinzo Abe unveiled fiscal stimulus
worth almost $1 trillion to offset the economic impact of the
coronavirus.
Traders warned that further gains in the yen may be limited
because Abe has agreed to declare a state of emergency for Tokyo
and other parts of Japan to slow coronavirus infections.
Many investors are looking for signs of a peak in the
pandemic, but some analysts warn of volatility given the
unpredictable nature of the previously unknown virus.
"Signs of a slowdown in the spread of coronavirus provided
markets a boost, but the reality is we cannot be certain, so
it's natural for the dollar to come lower," said Takuya Kanda,
general manager of the research department at Gaitame.com
Research Institute in Tokyo.
"It's difficult to trade solely on the factors from one
country, because so many countries are in a bad state because of
coronavirus."
The dollar fell 0.32% to 108.89 yen JPY= in Asia on
Tuesday. Against the euro EUR=EBS , the dollar eased slightly
to $1.0805.
Against the save-haven Swiss franc CHF=EBS , the greenback
held steady near a two-week high of 0.9796.
The dollar came into Asian trade on a positive note as risk
sentiment improved after the governors of New York and New
Jersey pointed to tentative signs that outbreaks in their states
was starting to plateau. But the mood gradually faded as U.S. stock futures ESc1
reversed and grinded lower.
The pound GBP=D3 rose 0.17% to $1.2294 on Tuesday in Asia
following a 0.3% decline on Monday. Against the euro, sterling
EURGBP=D3 held steady at 88.13 pence.
Johnson was admitted to hospital on Sunday night and had
been undergoing tests after suffering persistent coronavirus
symptoms, including a high temperature, for more than 10 days.
Downing Street had said he was still conscious, though his
condition deteriorated in the early evening. Britain has no formal succession plan should the prime
minister become incapacitated, but Johnson has asked Foreign
Secretary Dominic Raab to deputise for him. The yen edged higher against the euro EURJPY= and held
steady against the antipodean currencies AUDJPY= NZDJPY= ,
but analysts cautioned against reading too much into the yen's
rise because volumes are falling as more traders and corporate
customers work from home.
Japan's prime minister is set to announce a state of
emergency on Tuesday for the capital Tokyo and six other
prefectures to stem a worrying rise in virus infections in major
population centres.
Abe said the emergency would last around a month and give
governors the authority to call on people to stay at home and
businesses to close. It would stop short of imposing a formal
lockdown.
The Australian dollar AUD=D3 edged up 0.5% against its
U.S. counterpart, while the New Zealand dollar also rose 0.5%
against the greenback as investors felt more comfortable buying
currencies sensitive to risk.
The Reserve Bank of Australia is expected to keep policy on
hold at a meeting today after it already slashed interest rates
and embarked on quantitative easing.

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