July 28, 2020 / 2:25 PM / 14 days ago

FOREX-Dollar bounces from two-year lows, further weakness seen likely

 (Adds details, updates prices; changes byline, dateline;
previous LONDON)
    * Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E

    By Karen Brettell
    NEW YORK, July 28 - The dollar index bounced off a two-year
low on Tuesday, but looked primed for further weakness as the
United States continued to see a rise in coronavirus cases,
while the Federal Reserve is expected to maintain very loose
monetary policies.
    The dollar index against a basket of currencies
rebounded by 0.18% to 93.71, after dropping to 93.47 on Monday,
the lowest since June 2018.
    With no new events driving the move, analysts said the
greenback is likely consolidating before heading lower again.
    “I think the market is just talking a pause, it’s been a
fairly relentless dollar selloff,” said Vassili Serebriakov, an
FX strategist at UBS in New York.
    The continued spread of coronavirus is hampering the U.S.
economic recovery, while regions like Europe appear to have the
virus contained.
    “The global economy has been recovering from COVID somewhat
unevenly, but I think the base of the recovery in places like
Europe and China is looking more encouraging than in the U.S.,”
said Serebriakov. “The dollar is countercyclical, so when the
global economy picks up the dollar tends to weaken.”
    The dollar index has fallen from a three-year peak of 102.99
in March.
    The euro dipped 0.18% against the dollar to $1.1730,
after reaching $1.1781 on Monday, the highest since September
2018.
    U.S. Republicans and Democrats faced difficult talks on
Tuesday on how best to recover from the coronavirus pandemic,
after Republicans unveiled a relief proposal four days before
millions of Americans lose unemployment benefits.
    Ultra-loose Fed policy is also weighing on the U.S.
currency, with the central bank signaling that it will keep
rates near zero for years to come.
    Investors will be watching to see if the Fed indicates that
it will increase its purchases of longer-dated debt and whether
yield caps are likely going forward when it concludes its
two-day meeting on Wednesday.
    The dollar dipped 0.33% to 105.02 yen on Tuesday,
after earlier getting as low as 105.01 yen, the weakest since
March 13.

========================================================
    Currency bid prices at 10:03AM (1403 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1730        $1.1751     -0.18%         +4.64%      +1.1773     +1.1700
 Dollar/Yen       JPY=        105.0200       105.3700    -0.33%         -3.53%      +105.6800   +105.0300
 Euro/Yen         EURJPY=     123.20         123.81      -0.49%         +1.03%      +123.9800   +123.2300
 Dollar/Swiss     CHF=        0.9160         0.9197      -0.40%         -5.34%      +0.9227     +0.9156
 Sterling/Dollar  GBP=        1.2923         1.2881      +0.33%         -2.53%      +1.2930     +1.2839
 Dollar/Canadian  CAD=        1.3389         1.3354      +0.26%         +3.10%      +1.3406     +1.3331
 Australian/Doll  AUD=        0.7150         0.7149      +0.01%         +1.82%      +0.7176     +0.7114
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.0746         1.0808      -0.57%         -0.98%      +1.0827     +1.0744
 Euro/Sterling    EURGBP=     0.9077         0.9120      -0.47%         +7.35%      +0.9138     +0.9078
 NZ               NZD=        0.6657         0.6682      -0.37%         -1.17%      +0.6702     +0.6634
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        9.1135         9.0924      +0.23%         +3.82%      +9.1520     +9.0495
 Euro/Norway      EURNOK=     10.6929        10.6835     +0.09%         +8.69%      +10.7195    +10.6548
 Dollar/Sweden    SEK=        8.7615         8.7183      +0.11%         -6.27%      +8.7922     +8.7142
 Euro/Sweden      EURSEK=     10.2788        10.2671     +0.11%         -1.82%      +10.2966    +10.2584
 
    

        

 (Editing by Marguerita Choy)
  
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