July 23, 2020 / 5:17 PM / 23 days ago

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

    * 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 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)
  
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