June 3, 2020 / 2:39 PM / a month ago

FOREX-Dollar index dips to 11-week low as risk appetite improves

 (Adds details, updates prices; changes byline, dateline;
previous LONDON)
    By Karen Brettell
    NEW YORK, June 3 (Reuters) - The U.S. dollar fell to an
11-week low against a basket of other currencies on Wednesday,
on optimism that the worst of the economic downturn stemming
from the global spread of the coronavirus is over.
    The improving risk appetite has reduced demand for the
greenback, which benefits from safe haven buying when markets
are volatile and investors are reluctant to take risk.
    “Momentum seems to be running the table right now. We think
the broad pullback in the U.S. dollar presents an attractive
buying opportunity, but recognize there may still be room for
additional weakness in the near-term,” analysts at Wells Fargo
said in a report on Wednesday.
    The dollar index against a basket of major currencies
fell 0.22% to 97.37, after earlier dropping as low as 97.28, the
lowest since March 12.
    U.S. data on Wednesday showed that U.S. private payrolls
fell less than expected in May, suggesting layoffs were abating
as businesses reopen, though the overall economy's recovery from
the COVID-19 pandemic will be slow.
    U.S. services industry activity also pushed off an 11-year
low in May, though businesses appeared in no rush to rehire
workers as they reopen.
    The greenback gained 0.03% against the Japanese yen
to 108.69 yen, after earlier reaching 108.84 yen, the highest
since April 9. 
    The Australian dollar, which has been one of the best
performers from the increase in risk appetite, rose 0.23% to
$0.6910, after earlier reaching $0.6983, the highest since Jan.
3.
    The euro rose 0.40% to $1.1214, after getting as high
as $1.1231, the highest since March 16.
    Investors are focused on whether the European Central Bank
will increase the size of its 750 billion euro ($669 billion)
Pandemic Emergency Purchase Programme (PEPP) when it meets on
Thursday.
    Overnight euro implied volatility gauges jumped to 12%,
their highest in one month, suggesting traders were preparing
for moves bigger than usual in the common currency.
    Data on Wednesday showed that euro zone businesses suffered
another devastating contraction in activity in May and while
there are signs the worst is over, it could be months before
there is a return to growth.
    Sterling rose on Wednesday to a one-month high though Brexit
risks weighed on the currency.
    
    ========================================================
    Currency bid prices at 10:09AM (1409 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1214        $1.1169     +0.40%         +0.04%      +1.1231     +1.1168
 Dollar/Yen       JPY=        108.6900       108.6600    +0.03%         -0.16%      +108.8400   +108.4300
 Euro/Yen         EURJPY=     121.88         121.37      +0.42%         -0.06%      +122.1200   +121.2800
 Dollar/Swiss     CHF=        0.9629         0.9621      +0.08%         -0.51%      +0.9647     +0.9608
 Sterling/Dollar  GBP=        1.2575         1.2549      +0.21%         -5.16%      +1.2611     +1.2547
 Dollar/Canadian  CAD=        1.3510         1.3516      -0.04%         +4.04%      +1.3571     +1.3480
 Australian/Doll  AUD=        0.6910         0.6894      +0.23%         -1.58%      +0.6983     +0.6857
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.0800         1.0747      +0.49%         -0.48%      +1.0810     +1.0746
 Euro/Sterling    EURGBP=     0.8917         0.8897      +0.22%         +5.48%      +0.8928     +0.8879
 NZ               NZD=        0.6410         0.6368      +0.66%         -4.84%      +0.6430     +0.6361
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        9.4969         9.5438      -0.49%         +8.18%      +9.5714     +9.4612
 Euro/Norway      EURNOK=     10.6490        10.6624     -0.13%         +8.25%      +10.7066    +10.6079
 Dollar/Sweden    SEK=        9.3140         9.3277      +0.28%         -0.36%      +9.3583     +9.2637
 Euro/Sweden      EURSEK=     10.4479        10.4191     +0.28%         -0.20%      +10.4679    +10.3943
 

 (Reporting by Karen Brettell; Editing by Steve Orlofsky)
  
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