U.S. Dollar Drops On Improved Risk Sentiment
May 12 2020 - 6:18AM
RTTF2
The U.S. dollar fell against its major rivals in the European
session on Tuesday on safe-haven status, as investors focused on
upbeat earnings reports and a phased reopening of New York State on
Friday.
Governor Andrew Cuomo announced on Monday that certain parts of
the state will be permitted to resume business operations later
this week, including construction and retail sectors.
New York will loosen restrictions on some low-risk businesses,
which include drive-in theaters and certain recreational
activities.
Consumer prices in the U.S. decreased in line with economist
estimates in the month of April, according to a report by the Labor
Department.
The Labor Department said its consumer price index slid by 0.8
percent in April after falling by 0.4 percent in March.
The drop by the index, which matched economist estimates,
reflects the largest monthly decline since December of 2008.
Excluding food and energy prices, core consumer prices fell by
0.4 percent in April after edging down by 0.1 percent in March.
Economists had expected core prices to dip by 0.2 percent.
Investors await speech by Philadelphia President Patrick Harker
about the economic impact of COVID-19 at the Delaware State Chamber
of Commerce, in Wilmington, due at 10:00 am ET.
Fed Governor Randal Quarles will testify before the Senate
Banking Committee on supervision and regulation at the same
time.
The greenback appreciated against its most major counterparts in
the Asian session on safe-haven status, as fears of a second wave
of virus infections intensified after the fresh rise in cases in
China and South Korea.
The greenback weakened to 1.2378 against the pound, after rising
to 1.2287 at 8:30 pm ET. Immediate support for the greenback is
found around the 1.25 level.
Bank of England Deputy Governor Ben Broadbent said that the
central bank is likely to consider more monetary easing in future
after weighing the side-effects of negative interest rates, to help
the UK economy recover from the historic shock dealt by the
coronavirus, or Covid-19, pandemic.
The Monetary Policy Committee is "certainly prepared to do what
is necessary" despite downside risks, Broadbent told CNBC in an
interview.
The greenback fell to a 4-day low of 1.0865 against the euro,
down from a 5-day high of 1.0784 set in the previous session. The
greenback may locate support around the 1.10 level. The greenback
pulled back to 107.31 against the yen, after having appreciated to
107.69 at 6:30 pm ET. If the greenback slides further, 105.00 is
likely seen as its next support level.
Preliminary data from the Cabinet Office showed that Japan's
leading index fell to the lowest level in more than ten-and-a-half
years in March.
The leading index, which measures the future economic activity,
fell to 83.8 in March from 91.9 in February.
The greenback eased off to 0.6536 against the aussie, 0.6124
against the kiwi and 1.3972 against the loonie, from 5-day highs of
0.6432, 0.6041 and 1.4065, respectively hit in the Asian session.
The greenback is likely to challenge support around 0.70 against
the aussie, 0.64 against the kiwi and 1.33 against the loonie.
The USD/CHF pair logged a weekly low of 0.9666, compared to the
Asian session's 5-day high of 0.9750. Further downtrend may take
the greenback to a support around the 0.94 region.
The U.S. monthly budget statement for April is set for release
in the New York session.
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