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FOREX-Dollar retreats again in Asia as solid data offsets virus worries

Published 2020-10-27, 12:44 a/m
© Reuters.
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* Bright data lifts Asian currencies, weighs on dollar

* AUD, NZD resilient as FX traders wait-and-see ahead of election

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

By Tom Westbrook

SINGAPORE, Oct 27 (Reuters) - The dollar handed back some recent gains against most of its major rivals on Tuesday, as strong regional economic data helped to offset worries about a second wave of COVID-19 cases in Europe and the United States.

Profits at China's industrial firms rose for a fifth straight month in September and South Korea's economy roared back to growth, official data showed. supported the yuan CNY= and sent the won KRW= soaring close to a seven-month peak. It also unwound some of the previous day's modest dollar gains against major currencies amid an equities selloff driven by a resurgence in coronavirus infections.

Against a basket of currencies the dollar fell 0.1% =USD . It was lower by about the same margin on the euro, yen and pound and it slipped a little bit further against the Aussie and kiwi. AUD/

"Trade numbers in Asia have been improving. Most countries are now reporting positive year-on-year export growth. For now, that is helping to offset nervousness about the COVID outbreaks in Europe," said ANZ's head of Asia research Khoon Goh.

"It's the export-oriented currencies that are outperforming in Asia," he said. The Canadian dollar CAD=D3 also recovered some of Monday's selloff as the price of oil stabilised.

Christopher Wong, senior FX strategist at Maybank in Singapore, said the region's firm handle on the coronavirus, especially in North Asia, was also a positive factor, with Japan, Singapore, South Korea and China combined posting fewer than a thousand new cases a day through October.

That compares with the United States, Russia and France, all of which hit fresh records with tens of thousands of new daily coronavirus infections this week.

Europe needs a "serious acceleration" in the fight against the coronavirus, with the spectre of further shutdowns looming, a top World Health Organization official said on Monday. POSITION

Growing wariness about the U.S. presidential election kept a lid on large currency movements, however. Since the vote is just a week away many investors appear to have already figured out their positions.

Data shows long bets on the yen shrank for a fourth straight week last week, as investors wagered on a victory for Democrat Joe Biden, though short bets against the yen also fell - pointing to heightened uncertainty around the vote. 0#NETUSDFX=

"People are wary of putting on fresh positions given the event risk," said Mayank Mishra, an FX strategist at Standard Chartered (LON:STAN) Bank in Singapore. "Price action over the next one week may remain choppy," he said.

"The view we've taken is that the medium-term dollar bearish dynamics remain in place, irrespective of who comes to the White House. The short-term part may be affected by the outcome, and we believe that a Biden win is likely to accelerate the dollar downside."

If the Democrats also secure the Senate, a Biden-led administration is likely to press for a larger coronavirus aid package, lifting sentiment, widening the U.S. current account deficit and weakening the dollar.

Ahead on Tuesday, investors are looking to U.S. consumer confidence figures and the Richmond Fed manufacturing index at 1400 GMT, as well as the progress of the virus in Europe and the United States.

Elsewhere, the Taiwan dollar TWD=TP rose by as much as 1% in Asia to a more than nine-year high. The Turkish lira TRYTOM=D3 hit a record low on Monday amid a slew of geopolitical concerns and as a surprise central bank decision to keep its policy rate on hold last week reveberates through markets. bid prices at 12:25PM (425 GMT) Description

RIC

Last

U.S. Close Pct Change

YTD Pct

High Bid

Low Bid

Previous

Change

Session

Euro/Dollar

EUR=EBS

$1.1824

$1.1810

+0.12%

+5.47%

+1.1825

+1.1805 Dollar/Yen

JPY=D3

104.7300

104.8500

-0.09%

-3.55%

+104.8800 +104.7600 Euro/Yen

EURJPY=

123.82

123.80

+0.02%

+1.53%

+123.9000 +123.7100 Dollar/Swiss

CHF=EBS

0.9067

0.9078

-0.12%

-6.30%

+0.9082

+0.9064 Sterling/Dollar GBP=D3

1.3037

1.3022

+0.11%

-1.71%

+1.3039

+1.3016 Dollar/Canadian CAD=D3

1.3181

1.3213

-0.24%

+1.46%

+1.3211

+1.3181 Aussie/Dollar

AUD=D3

0.7133

0.7123

+0.14%

+1.66%

+0.7137

+0.7116 NZ

NZD=D3

0.6691

0.6678

+0.21%

-0.55%

+0.6693

+0.6675 Dollar/Dollar

All spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX

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