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Dollar trades in narrow range as four-day euro rally fizzles

Kitco News

NEW YORK (Reuters) - The dollar traded in a narrow range against major peers on Thursday as investors weighed the impact of the global economic lockdown, and the euro’s four-day rally against the U.S. currency on optimism about a closer fiscal union in Europe ran out of steam.

The U.S. Dollar Currency Index, which measures the greenback’s strength against six major currencies, was up 0.1% at 99.27.

Data on Thursday showed millions more Americans filed for unemployment benefits last week as backlogs continue to be cleared and disruptions from the novel coronavirus unleash a second wave of layoffs, pointing to another month of staggering job losses in May.

The greenback, which draws investors in times of economic uncertainty, has fallen back since hitting a more than three-year high in March as central bank interventions have eased international dollar shortage and investors have gravitated toward risky assets.

“The USD has dropped to the lower end of the trading range that has been in place for some weeks as markets assess the global economic lock down,” said Shaun Osborne Chief FX strategist at Scotia Bank.

“We think scope for additional losses is likely limited unless some fresh fundamental dynamic emerges to drive trading.”

Speculators’ net bearish bets on the U.S. dollar shrank to the smallest position in seven weeks in the latest week.

For a graphic on FX positions:

here

The euro was supported in recent sessions by France and Germany’s recent proposal for a 500-billion-euro ($543 billion) recovery fund to offer grants to regions and sectors hit hardest by the coronavirus pandemic.

The euro 0.09% lower on the day at $1.09695, after a gain of about 1.6% over the last fours sessions.

The pound was about flat on the day against the dollar but remains under pressure as weak inflation drives speculation the Bank of England may cut interest rates below zero.

Reporting by Saqib Iqbal Ahmed; Editing by Nick Zieminski

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