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Dollar Retreats as Investors Look to Continuous Global Economic Recovery

By Gina Lee – The dollar was down on Monday morning in Asia, with rising optimism over the global economic recovery from COVID-19 leading investors to retreat from the safe-haven asset even as the number of global cases continues to rise.

Johns Hopkins University data indicated that there are over 6 million cases as of June 1.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies dropped 0.34% to 98.002 by 12:29 AM ET (5:29 AM GMT).

“Market participants believe that the worst of the health and financial and economic crises are now behind us. That’s supportive for commodity prices...and if we’re past the worst of it, then commodity currencies tend to do well and the U.S. dollar tends to do poorly in the early stages of a recovery,” Commonwealth Bank of Australia (OTC:CMWAY) FX analyst Joe Capurso told CNBC.

Meanwhile, U.S. President Donald Trump did not move to end phase one of its trade deal with China when he laid out his response to China’s national security law for Hong Kong and Macau on Friday. Investors breathed a sigh of relief that the response has not yet spill over into a broader trade dispute.

“It’s tough to be a bear at the moment and the path of least resistance for risk remains to the upside in my opinion. We’ve moved past Trump’s China speech without the market hearing anything that will upset China too greatly and promote an immediate reaction,” Chris Weston, head of research at Melbourne brokerage Pepperstone, told CNBC.

The USD/JPY pair was down 0.11% to 107.66.

The USD/CNY pair slid 0.20% to 7.1208. China’s National Bureau of Statistics released data on Sunday indicating expansion in China’s manufacturing sector in May.

The AUD/USD pair jumped 0.93% to 0.6728 and the NZD/USD pair was up 0.65% to 0.6241.

The GBP/USD pair gained 0.38% to 1.2391 with the U.K. loosening months-long lockdown measures. The government announced the resumption of competitive sport from Monday.

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