Dollar gains on the market risk sentiment sours

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LONDON (Reuters) – The dollar regained some ground Wednesday, after two consecutive days of losses, as the money markets tempered the hopes of a quick recovery.

FILE PHOTO: U.S. Dollar banknotes are seen in this photo illustration taken on 12 February 2018. REUTERS/Jose Luis Gonzalez/Illustration/Photo archives

The U.S. currency has gained more than 0.2 percent against a basket of currencies as risk sentiment soured in early trading in Europe.

Selling pressure hit several of the major currencies, including pounds sterling, a decline of more than a third of a percent. The euro gave up some of the week’s gains, falling nearly 0.2%.

The new zealand dollar fell nearly 1% after the country’s central bank, said the economic balance of risks remains to the downside and it is ready to use additional monetary tools as necessary.

Analysts have said that the caution was warranted given the risk of a second wave of Covid-19 infections, in spite of the improved economic data, including stronger rebound in German business confidence, according to data Wednesday.

“The risk of a second wave in the world has not been banned yet, and can quickly push the foreign exchange market in the old pattern of risk aversion is higher, we will purchase places of safety; that is to say, the dollar – even under the assumption that the prohibitions imposed in this case would probably be much less severe than the first time round,” analysts at Commerzbank said in a note.

Despite losing ground, the dollar index is still more than 0.9 per cent this week on the improvement of the economic situation, with the united KINGDOM, euro area and the UNITED states of the data of the previous week, to support riskier currencies against the safe-haven of the dollar.

The International Monetary Fund revised global growth projections in its World economic Outlook update later, on Wednesday from 13: 00 GMT), bringing a new idea of the extent of economic damage caused by the Covid-19 pandemic, and the pace of the recovery.

The IMF forecast in April predicted world GDP would fall by 3% in 2020.

Doping coronavirus case in the united States, in Germany and elsewhere are closely monitored.

“We expect that over the next few weeks as we get more clarity on this, the governor of the state will be in a better position to decide how to proceed,” RBC Capital Markets chief U.S. economist, Tom Porcelli, says AMERICAN business.

(This story corrects the title to say “gains” instead of “hollow”; no change in text)

Reporting by Iain Withers, editing by Larry King

Our Principles:Thomson Reuters Trust Principles.

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