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FOREX--Dollar weakens as stocks gain; Norway's crown jumps

Published 18/05/2020, 06:06 pm
© Reuters.
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* Pound near seven-week low on Brexit worries, negative rates

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Julien Ponthus

LONDON, May 18 (Reuters) - The dollar edged down on Monday as optimism about the re-opening of economies hit by the coronavirus pandemic boosted risk appetite, lifting commodity currencies such as the Norwegian krone.

The gradual easing of lockdowns has fuelled optimism across global markets despite fresh trade tensions between the United States and China.

"Markets are quietly risk-on overnight", said Adam Cole, chief currency strategist at RBC Capital Markets.

The dollar index drifted 0.05% lower at 100.28. The Norwegian krone was lifted by rising oil prices, supported by output cuts and signs of a recovery in demand.

Against the dollar, the krone NOK=D3 jumped 0.6% to 10.1860. Other commodity currencies also rose and gold gained more than 1% to its highest in over seven years.

Gains in stocks also lifted other major currencies such as the Australian dollar, which was up AUD=D3 half a percent at $0.6446 and the euro EUR=D3 gained 0.05% to $1.0827.

Against the yen JPY= , the U.S. currency lost about 0.2% at 107.20 per dollar after data showed Japan slipped into recession for the first time since 2015. Policymakers are bracing for the nation's worst postwar slump.

Investors were also looking to Purchasing Managers' Index surveys due across major economies later this week for the next insight into the outlook.

The pound stood at 89.35 pence per euro EURGBP= and was under pressure at $1.2107 GBP= after a week-long deadlock over a post-Brexit trade deal with the European Union and increasing focus on the possibility of negative rates.

The Bank of England's chief economist, Andy Haldane, did not rule such a move, in an interview with the Telegraph newspaper published on Saturday.

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