Dollar in narrow range, the yen falls as stocks rise

By Stanley White

TOKYO (Reuters) – The dollar held steady against most currencies on Monday as investors awaited data showing the US service sector stopped contracting, giving further hope for an economic recovery in the coronavirus pandemic.

The euro moved in a narrow range ahead of economic data from Germany and the eurozone which is also forecast to show a strong rebound in corporate activity and retail sales, easing concerns about the economic outlook.

The yen fell lower against most major currencies as gains in Asian share prices encouraged some risky trading.

A steady increase in new coronavirus infections in the United States has discouraged some investors from taking large positions in the foreign exchange market, but most market participants remain focused on the increasing likelihood that major economies will continue to recover.

“When it comes to the dollar / yen, recovery expectations support the dollar, but concerns about the virus are limiting the lead,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

“The markets are focused on other currency pairs, such as the Australian dollar, which is still in a clear uptrend against the US dollar due to higher prices.”

The dollar rose to 107.74 yen on Monday in Asia after a 0.3% increase last week. Market activity was subdued after the July 4 long weekend vacation in the United States.

The euro () rose 0.2% to $ 1.1270. Against the pound sterling, the common currency exceeded 90.29 pence ().

Pound sterling moved in a narrow range to $ 1.2482.

Against the Swiss franc, the dollar it dropped to 0.9443.

The Institute for Supply Management index for non-manufacturing activity, which expires later on Monday, is expected to rise to 50.0 in June from 45.4 in the previous month, indicating that activity stopped declining.

The dollar has been locked in narrow trading ranges recently, as concerns about a resurgence of US coronavirus infections offset the growing optimism about the economy.

The euro will focus later on the trading day as Germany, the largest economy in the euro zone, will launch industrial orders by May.

Retail sales for the entire eurozone will also launch later on Monday. Both indicators are forecast to recover strongly from the large declines caused by the spread of the coronavirus.

The yen fell 0.4% against the euro () to 121.41. The Japanese currency also fell around 0.5% against the Australian () and New Zealand () dollars as risk sentiment improved.

However, the yen could quickly reverse course given the uncertainty surrounding the coronavirus, analysts said.

the It rose slightly to 7.0570 per dollar on Monday, and also strengthened by a jump in Chinese share prices to the highest in five years, as investors ignored concerns over diplomatic tension between the United States and China.

The Australian Dollar It rose 0.2% to $ 0.6956 on Monday in Asia after a 1.2% rise last week.

This is another market approach ahead of a Reserve Bank of Australia (RBA) policy meeting on Tuesday. Analysts expect rates to remain at 0.25% amid signs that Australia’s economic recession will not be as severe as previously feared.

Recent increases in the prices of copper and other commodities that Australia exports, combined with a more positive tone for the RBA, are likely to support the Australian, analysts say.

However, there are still reasons to be cautious with the Australian. On Monday, the Australian state of Victoria said it will close its border with the country’s most populous state, New South Wales, to contain a surge in coronavirus infections.

Across the Tasman Sea, the New Zealand dollar It was quoted at $ 0.6551.

Chart: World Exchange Rates in 2020 https://graphics.reuters.com/GLOBAL-CURRENCIES-PERFORMANCE/0100301V041/index.html