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Dollar weakens as stocks gain; Norway's crown jumps

Published 05/17/2020, 09:17 PM
Updated 05/18/2020, 05:36 AM
© Reuters. FILE PHOTO:  U.S. dollar banknote is seen in this picture illustration
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By Julien Ponthus

LONDON (Reuters) - The dollar edged down on Monday as optimism about the re-opening of economies hit by the coronavirus pandemic boosted risk appetite, lifting commodity currencies such as the Norwegian krone.

The gradual easing of lockdowns has fuelled optimism across global markets despite fresh trade tensions between the United States and China.

"Markets are quietly risk-on overnight", said Adam Cole, chief currency strategist at RBC Capital Markets.

The dollar index drifted 0.05% lower at 100.28. The Norwegian krone was lifted by rising oil prices, supported by output cuts and signs of a recovery in demand.

Against the dollar, the krone jumped 0.6% to 10.1860. Other commodity currencies also rose and gold gained more than 1% to its highest in over seven years.

Gains in stocks also lifted other major currencies such as the Australian dollar, which was up half a percent at $0.6446 and the euro (EUR=D3) gained 0.05% to $1.0827.

Against the yen , the U.S. currency lost about 0.2% at 107.20 per dollar after data showed Japan slipped into recession for the first time since 2015. Policymakers are bracing for the nation's worst postwar slump.

Investors were also looking to Purchasing Managers' Index surveys due across major economies later this week for the next insight into the outlook.

The pound stood at 89.35 pence per euro (EURGBP=) and was under pressure at $1.2107 after a week-long deadlock over a post-Brexit trade deal with the European Union and increasing focus on the possibility of negative rates.

© Reuters. FILE PHOTO:  U.S. dollar banknote is seen in this picture illustration

The Bank of England's chief economist, Andy Haldane, did not rule such a move, in an interview with the Telegraph newspaper published on Saturday.

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