Gold prices edge up amid Fed rate cut hopes; US-Russia talks awaited
* Dollar lifts slightly; Japanese yen falls 0.6%
* Markets look for recovery from global pandemic
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Updates prices throughout, adds Riksbank, analyst comments,
chart)
By Elizabeth Howcroft
LONDON, May 11 (Reuters) - The dollar rose on Monday as
investors worried that economic recovery might be slower than
hoped and sought the safety of the U.S. currency even though
more countries eased coronavirus lockdowns.
The dollar was broadly flat overnight but rose in early
London trading as investors adjusted their risk expectations
with an eye on warnings of a second wave of COVID-19 infections.
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.
South Korea warned of a second wave of the virus as
infections rebounded to a one-month high and new infections have
also accelerated in Germany. "More of a risk-off tone has taken over at the start of this
week," said Lee Hardman, currency strategists at MUFG, who said
that there were some concerns that the re-opening of economies
in places such as Germany may have led to a pick-up in infection
rate.
Against a basket of comparable currencies, the dollar was
last up 0.3% since New York's close, at 100.090 =USD .
The safe-haven Japanese yen hit a 10-day low versus the
dollar, down around 0.6% JPY=EBS , after a U.S. buyer bought a
large amount of dollar-yen, forcing the pair above 107.
Also weighing on global risk sentiment is the prospect of
worsening tensions between the U.S. 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. tarrifs. But U.S. President Donald Trump said he was
"very torn" over whether or not to end the preliminary phase one
trade deal between the two countries. On Monday, China warned that it will take countermeasures in
response to a U.S. decision to tighten visa terms for Chinese
journalists. This news did not move the market, analysts said.
The euro fell against the dollar, last down around 0.3% at
$1.08165 EUR=EBS .
"Developments in the euro area keep Eurozone equities and
banks underperforming vs. the rest of the world, which does not
help the euro," Morgan Stanley analysts wrote in a note to
clients.
The riskier Australian dollar was down 0.7% versus the U.S.
dollar AUD=D3 , while the New Zealand dollar was down 0.9%
having fallen from around 0400 GMT NZD=D3 .
The Swedish crown fell around 0.5% against the dollar,
weakening to as much as 9.8150 SEK=D3 , also down around 0.2%
against the euro, at 10.5985 EURSEK=D3 .
Minutes from the Riksbank's latest meeting, published on
Monday, showed that Swedish rate-setters were united on seeing
balance sheet measures as currently the best way of conducting
policy amid the outbreak of the novel coronavirus. "EUR/SEK is approaching attractive levels to buy, the pair
is oversold and no longer reflects the likely central bank
easing coming up. We suggest buying EUR/SEK on dips down to
10.55 (the long term support) and target 11.20," wrote Morgan
Stanley analysts.
"All in, the factors which drove the EUR/SEK strength in the
past eight years seem likely to continue to hold," they added.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Dollar IMAGE https://tmsnrt.rs/2WQM13c
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>