US Markets

Euro highest since 2018, dollar hurt by coronavirus spread

Credit: REUTERS/DADO RUVIC

The dollar tumbled to an almost two-year low against the euro on Monday on concerns about the growing number of coronavirus cases in the United States and ahead of the Federal Reserve's meeting this week when it is expected to confirm its commitment to rock-bottom interest rates.

By Karen Brettell

NEW YORK, July 27 (Reuters) - The dollar tumbled to an almost two-year low against the euro on Monday on concerns about the growing number of coronavirus cases in the United States and ahead of the Federal Reserve's meeting this week when it is expected to confirm its commitment to rock-bottom interest rates.

“It seems like we’re seeing the dollar lose its crown,” said Edward Moya, senior market analyst at OANDA in New York. “There are high expectations you’re going to see the Fed continue to signal that they’re prepared to do more at a longer run, and the U.S. economic recovery is not going to be anywhere near as smooth as what is unfolding in Europe.”

Florida on Sunday became the state with the second highest number of total coronavirus cases, just behind California and becoming the second state to overtake New York, which was the worst-hit state at the start of the U.S. novel coronavirus outbreak, according to a Reuters tally.

U.S. Treasury Secretary Steve Mnuchin said on Sunday that Republican coronavirus relief legislation will be made public on Monday and he believes the party can move quickly with Democrats to hammer out their differences.

The Fed is expected to reiterate that it will keep rates near zero for years to come when it concludes its two-day policy meeting on Wednesday. Investors will be watching to see if the U.S. central bank indicates that it will increase its purchases of longer-dated debt and whether yield caps are likely going forward.

The euro EUR= was last up 0.79% at $1.1726, after earlier reaching $1.1781, the highest level since September 2018.

The single currency may extend gains to $1.20 if the region is able to contain any resurgences of the coronavirus, Moya said.

“I think you’re going to see a steady amount of investment and market positioning going back to Europe, and that will provide some room for much more weakness here with the U.S. dollar,” he said.

The dollar index =USD fell 0.72% to 93.68. It earlier dipped to 93.47, the lowest since June 2018.

A broad measure of dollar positioning on Friday showed that net short positions in the greenback last week rose to the highest level since April 2018.

The safe-haven Japanese yen gained on the concerns about deteriorating U.S.-China relations. Tensions rose after Washington last week ordered China's consulate in Houston to close, prompting Beijing to shutter the U.S. consulate in Chengdu.

The dollar fell 0.66% JPY= to 105.42 yen, after earlier dropping to 105.13, the weakest since March 13.

Sterling gained to a more than four-month high on Monday, driven by dollar weakness and as uncertainty over Brexit and Britain's economic prospects kept most investors on the sidelines.

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Currency bid prices at 3:31PM (1931 GMT)

Description

RIC

Last

U.S. Close Previous Session

Pct Change

YTD Pct Change

High Bid

Low Bid

Euro/Dollar

EUR=

$1.1746

$1.1654

+0.79%

+4.79%

+1.1781

+1.1639

Dollar/Yen

JPY=

105.4200

106.1200

-0.66%

-3.16%

+106.1800

+105.1300

Euro/Yen

EURJPY=

123.85

123.70

+0.12%

+1.56%

+123.9000

+123.2200

Dollar/Swiss

CHF=

0.9204

0.9206

-0.02%

-4.90%

+0.9229

+0.9168

Sterling/Dollar

GBP=

1.2876

1.2789

+0.68%

-2.89%

+1.2901

+1.2783

Dollar/Canadian

CAD=

1.3361

1.3413

-0.39%

+2.89%

+1.3430

+1.3354

Australian/Dollar

AUD=

0.7144

0.7103

+0.58%

+1.75%

+0.7149

+0.7088

Euro/Swiss

EURCHF=

1.0815

1.0726

+0.83%

-0.34%

+1.0837

+1.0729

Euro/Sterling

EURGBP=

0.9124

0.9110

+0.15%

+7.93%

+0.9148

+0.9099

NZ Dollar/Dollar

NZD=

0.6679

0.6644

+0.53%

-0.85%

+0.6692

+0.6628

Dollar/Norway

NOK=

9.0986

9.1588

-0.66%

+3.65%

+9.1865

+9.0624

Euro/Norway

EURNOK=

10.6912

10.6760

+0.14%

+8.67%

+10.7198

+10.6325

Dollar/Sweden

SEK=

8.7407

8.8181

-0.31%

-6.49%

+8.8499

+8.7189

Euro/Sweden

EURSEK=

10.2712

10.3033

-0.31%

-1.89%

+10.3033

+10.2578

(Reporting by Karen Brettell; Editing by Leslie Adler)

((karen.brettell@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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