FOREX-Dollar holds gains versus yen before major economic data

FOREX-Dollar holds gains versus yen before major economic data

Reuters  | Jul 01, 2020 02:54

FOREX-Dollar holds gains versus yen before major economic data

* Graphic: World FX rates in 2020
* Dollar up versus yen but weak against commodity currencies
* U.S. economy is improving but coronavirus remains a risk
* Mixed signals stymie trade in euro

By Stanley White
TOKYO, July 1 (Reuters) - The dollar held onto gains against
the yen on Wednesday ahead of data expected to show U.S.
manufacturing activity and hiring continued to recover from the
economic shock caused by the coronavirus pandemic.
The euro was hemmed into a narrow range as traders awaited
data on Germany's manufacturing sector, retail sales, and the
jobless rate to gauge the health of the eurozone economy.
A surge in coronavirus infections in the U.S. south and
southwest has worried some market participants, but most
investors are betting this will not be enough to derail a
broader rebound in the global economy.
"The dollar will be supported against the yen if U.S.
economic data are positive, but U.S. yields are not rising much
because of speculation about yield curve control," said Shusuke
Yamada, head of foreign exchange and Japan equity strategy at
Merrill Lynch Japan Securities.
"The euro looks stable, but there are questions about Brexit
and the pace of economic reopening, which means the euro could
soon be overvalued."
The dollar traded at 107.99 yen JPY= in Asia on Wednesday,
close to the highest in three weeks.
The mood for the yen soured after Bank of Japan data showed
business sentiment fell to an 11-year year low. The euro EUR=D3 held steady at $1.1234. Against the
British pound, the common currency EURGBP= traded at 90.65
pence following a 0.9% decline on Tuesday.
Sterling GBP=D3 bought $1.2394 as it held on firmly to the
previous session's gains, but traders may be reluctant to buy
the pound further due to worries about Britain's trade
negotiations with the European Union.
The U.S. Institute for Supply Management's purchasing
managers' index (PMI) for manufacturing due later on Wednesday
is forecast to show that activity in June continued to recover
from an 11-year low marked in April, when the coronavirus
paralysed large swathes of the global economy.
Investors also await the closely-watched U.S. nonfarm
payrolls report on Thursday, which is expected to show the
economy added 3 million jobs in June.
The dollar has managed to remain strong against the yen due
to signs of economic revival, but the greenback has failed to
make headway against commodity currencies, showing that some
investors remain wary of downside risks.
Normally Treasury yields would rise due to an improving
economy, but benchmark 10-year yields US10YT=RR have moved in
a narrow range around 0.65% since mid June, when Federal Reserve
Chairman Jerome Powell said policymakers discussed yield curve
control, which can be used to cap bond yields. The Australian dollar AUD=D3 bought $0.6895 on Wednesday
following a 0.5% gain on Tuesday.
The New Zealand dollar NZD=D3 stood at $0.6447, also
holding onto gains from the previous session.
The Swiss franc CHF=D3 , a currency traditionally sought as
a safe haven during times of heightened risk, also perked up
against the greenback, which shows that positive economic data
alone is not enough to support broad-based dollar gains.
The euro has lacked conviction amid mixed signals about the
eurozone economy and limited progress in talks on the future
trade relationship between Britain and the EU.
Data due later on Wednesday from Germany are expected to
show retail sales in Europe's largest economy fell at a slower
pace but the manufacturing sector continued to contract, which
could hurt sentiment for the euro.

Related News

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (UK) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 简体中文 繁體中文 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
Saving Changes


Download the App

More markets insights, more alerts, more ways to customize assets watchlists only on the App is better on the App!

More content, faster quotes and charts, and a smoother experience is available only on the App.