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FOREX-Yen gains, Aussie slips as risk sentiment sours

The safe haven Japanese yen
gained on Friday and riskier currencies, including the
Australian dollar, dropped as risk sentiment soured after U.S.
President Donald Trump threatened to impose new tariffs on China
over the coronavirus crisis.
Trump said on Thursday his hard-fought trade deal with China
was now of secondary importance to the coronavirus pandemic and
he threatened new tariffs on Beijing, as his administration
crafted retaliatory measures over the outbreak.
“U.S. President Trump soured the mood in equity markets,
raising his accusations against China about the coronavirus
outbreak, threatening new tariffs,” Action Economics said in a
report. “The yen has outperformed while commodity currencies
have underperformed amid a sharp phase of risk-off positioning.”
The dollar fell 0.29% against the yen to 106.86 yen.
The Australian dollar, which on Thursday reached a
seven-week high of $0.6569, dropped 1.54% to $0.6410.
The Chinese yuan also weakened in the offshore market
to 7.1378 yuan, the most per dollar since April 2.
“Given the scale of the COVID-19 impact, there is certainly
a high risk of geopolitical tensions escalating considerably as
lockdowns reverse,” said Derek Halpenny, head of research at
“This would clearly be another hit to global trade that
would add a layer of dollar support going forward,” Halpenny
The euro continued to gain against the greenback,
having also rallied on Thursday on month-end repositioning.
It was last up 0.17% at $1.0974, after earlier reaching
$1.1017, the highest since April 1.
Much of Europe and Asia was closed on Friday for
International Workers’ Day.
The greenback gained 0.94% against the Canadian dollar
, which also suffered from the risk-off move.
Canada on Friday tapped Tiff Macklem, an experienced central
banker who has been a leading voice in the country for the
transition toward a green economy, as the Bank of Canada’s 10th
central bank governor.
The dollar index against a basket of currencies fell
0.04% to 99.08.
Deutsche Bank currency strategist George Saravelos said that
if the United States imposes capital controls on China it would
be dollar-negative, as that would imply outflows from
greenback-denominated assets.
“If the move is politically driven, it would be a clear
dollar negative in our view. It would lead to a shift in reserve
holdings out of the USD into EUR, JPY, GBP, gold and other
reserve proxies,” Saravelos said.

Currency bid prices at 3:00PM (1900 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Euro/Dollar EUR= $1.0974 $1.0955 +0.17% -2.11% +1.1017 +1.0935
Dollar/Yen JPY= 106.8600 107.1700 -0.29% -1.84% +107.4000 +106.6100
Euro/Yen EURJPY= 117.28 117.34 -0.05% -3.83% +117.7500 +117.0300
Dollar/Swiss CHF= 0.9617 0.9652 -0.36% -0.63% +0.9669 +0.9590
Sterling/Dollar GBP= 1.2483 1.2592 -0.87% -5.85% +1.2600 +1.2484
Dollar/Canadian CAD= 1.4072 1.3941 +0.94% +8.36% +1.4109 +1.3931
Australian/Doll AUD= 0.6410 0.6510 -1.54% -8.70% +0.6511 +0.6411
Euro/Swiss EURCHF= 1.0554 1.0574 -0.19% -2.75% +1.0583 +1.0552
Euro/Sterling EURGBP= 0.8790 0.8696 +1.08% +3.97% +0.8795 +0.8693
NZ NZD= 0.6047 0.6124 -1.26% -10.23% +0.6126 +0.6048
Dollar/Norway NOK= 10.3511 10.2414 +1.07% +17.92% +10.3568 +10.2391
Euro/Norway EURNOK= 11.3620 11.2270 +1.20% +15.49% +11.3910 +11.2085
Dollar/Sweden SEK= 9.8566 9.7562 +1.27% +5.45% +9.8566 +9.7494
Euro/Sweden EURSEK= 10.8210 10.6848 +1.27% +3.36% +10.8240 +10.6872

(Reporting by Karen Brettell; Additional reporting by Olga
Cotaga in London; editing by Jonathan Oatis and Chizu Nomiyama)

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