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FOREX-U.S. dollar plunges to nearly two-year low as euro soars

Gertrude Chavez-Dreyfuss
·4 mins read

* Euro hits nearly 2-year high vs dollar * Yuan recovers to trade around 7 per dollar * U.S. jobless claims rise, add to dollar bearishness * U.S. coronavirus cases surge again * Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E (Adds new comment, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, July 23 (Reuters) - The dollar dropped to its lowest in nearly two years on Thursday, as investors continued to sell the buck on expectations the U.S. economy will likely underperform its peers in the developed world with the surge in new coronavirus cases. By contrast, the euro rose to its highest since early October 2018, still basking in the glow of the European recovery fund approved earlier this week. A rise in U.S. jobless claims last week, the first time in four months, also added to the dollar's woes, as a persistent increase in COVID-19 cases has derailed the labor market and dampened consumer demand. "There has been a turn in dollar sentiment," said Marc Chandler, chief market strategist, at Bannockburn Forex in New York. "Two months ago, my dollar bearishness was not a consensus view. I think now it has become pretty much consensus." U.S. coronavirus cases approached 4 million on Thursday, with over 2,600 new cases every hour on average, the highest rate in the world, according to a Reuters tally. In midday trading, the dollar index was down 0.4% at 94.621, after hitting its lowest since late September 2018. It has lost nearly 8% since its March 20 peak, when a global dollar funding crunch saw a surge in demand. The dollar briefly edged higher after U.S. Treasury Secretary Steven Mnuchin said the U.S. government will protect the stability of the currency. Against the Japanese yen, the dollar was down 0.3% at 106.82 yen. The U.S. currency was also down 0.5% against the Swiss franc at 0.9252 franc. Earlier it dropped to a more than four-month low. Still, some analysts believe the dollar's sell-off is overdone, especially against the euro, and the buck will likely bounce back. "The market believes Europe handled the virus well. However, cases in Spain are going up again," said Momtchil Pojarliev, head of currencies at BNP Asset Management in New York. The euro was up 0.4% at $1.1615, hitting a fresh 21-month high of $1.1601 hit earlier on Wednesday. The Australian dollar retreated from a 15-month peak against the greenback to around US$0.7125, down 0.2%, while the New Zealand dollar fell 0.2% to US$0.6651, below Wednesday's six-month top of US$0.6678. Elsewhere, China's offshore yuan partially recovered losses from an earlier slide against the U.S. dollar, which was last down 0.1% at 7.009 yuan. The United States gave China until Friday to close its consulate in Houston following allegations of spying. ======================================================== Currency bid prices at 1:02PM (1702 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1620 $1.1568 +0.45% +3.66% +1.1626 +1.1541 Dollar/Yen JPY= 106.8100 107.1400 -0.31% -1.88% +107.2200 +106.8100 Euro/Yen EURJPY= 124.12 123.97 +0.12% +1.78% +124.2400 +123.7200 Dollar/Swiss CHF= 0.9246 0.9295 -0.53% -4.46% +0.9301 +0.9247 Sterling/Dollar GBP= 1.2745 1.2732 +0.10% -3.88% +1.2759 +1.2674 Dollar/Canadian CAD= 1.3355 1.3415 -0.45% +2.84% +1.3427 +1.3351 Australian/Doll AUD= 0.7126 0.7138 -0.17% +1.50% +0.7161 +0.7091 ar Euro/Swiss EURCHF= 1.0746 1.0753 -0.07% -0.98% +1.0762 +1.0716 Euro/Sterling EURGBP= 0.9117 0.9084 +0.36% +7.84% +0.9124 +0.9082 NZ NZD= 0.6652 0.6661 -0.14% -1.25% +0.6689 +0.6631 Dollar/Dollar Dollar/Norway NOK= 9.1800 9.1389 +0.45% +4.57% +9.2214 +9.1055 Euro/Norway EURNOK= 10.6694 10.5970 +0.68% +8.45% +10.6725 +10.5523 Dollar/Sweden SEK= 8.8410 8.8549 +0.10% -5.42% +8.9113 +8.8304 Euro/Sweden EURSEK= 10.2760 10.2657 +0.10% -1.85% +10.2880 +10.2420 (Reporting by Gertrude Chavez-Dreyfuss; editing by Jonathan Oatis and Nick Zieminski)