The greenback fell across the board on Tuesday due to increased risk sentiment as the easing of lockdown measures in several countries triggered optimism of a global economic recovery from the COVID-19 pandemic.
Versus the Japanese yen, although dollar jumped to session highs at 107.92 in Asian morning on comments from Bank of Japan Governor Haruhiko Kuroda, price erased its gains and tumbled in the European session on USD’s broad-based weakness and fell to session lows of 107.41 at New York open. Later, the pair staged a short-covering rebound to 107.68 in New York and moved narrowly in afternoon trading.
Reuters reported Japan’s economy will remain in a severe state due to the fallout from the coronavirus pandemic, Bank of Japan Governor Haruhiko Kuroda said, maintaining his gloomy outlook even as the government lifted its state-of-emergency declaration nationwide. “The BOJ is ready to ease without hesitation if needed, with an eye out on the impact from the pandemic,” Kuroda said in a semi-annual parliamentary testimony on monetary policy on Tuesday.
The single currency traded with a firm bias in Asia and gained to 1.0917 at the European open. Intra-day rise accelerated in European morning on USD’s broad-based weakness and euro rallied to session highs of 1.0995 in late New York trade before easing.
The British pound also traded with a firm bias and gained to 1.2223 in Asian morning. Intra-day rise accelerated at European open and price rallied to 1.2326 in European morning on USD’s weakness and then ratcheted higher to session highs of 1.2363 in New York morning due to active cross-buying of sterling especially vs euro before retreating on profit taking.
In other news, Reuters reported the Bank of England is not yet remotely close to any decision to take interest rates below zero, the central bank’s Chief Economist Andy Haldane said on Tuesday. Haldane also said some recent economic data was coming in just “a shade better” than a scenario for the economy published by the BoE earlier this month.
On the data front, Reuters reported U.S. consumer confidence nudged up in May, suggesting the worst of the novel coronavirus-driven economic slump was probably in the past as the country starts to reopen, but it would probably take a while to fully dig out of the hole amid record unemployment. The Conference Board said on Tuesday its consumer confidence index edged up to a reading of 86.6 this month from a downwardly revised 85.7 in April. Economists polled by Reuters had forecast the index rising to 87.5 in May from the previously reported reading of 86.9 in April.
Data to be released on Wednesday :
Australia construction work done, France business climate, consumer confidence, Swiss investor sentiment, Canada building permits, and U.S. MBA mortgage applications, redbook, Richmond Fed manufacturing index.
Source from https://www.fxstreet.com/analysis/dollar-falls-broadly-on-return-of-risk-sentiment-may-27-2020-202005270153