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Europe, Forex

Dollar rises but posts biggest monthly drop in a decade

* Dollar index up slightly after recent weakness * Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E (Adds quotes, latest prices) By Caroline Valetkevitch NEW YORK, July 31 (Reuters) – The dollar rose against a basket of currencies on Friday as investors covered shorts and took profits after the biggest monthly decline in the currency in a decade. The dollar index was down 4.1% for July, its biggest monthly percentage fall since September 2010, with most of the drop coming in the last 10 days as new coronavirus cases surged across several U.S. states and some recent data pointed to an economic recovery losing steam. On Friday, the dollar mostly held gains after data showed U.S. inflation-adjusted consumer spending has pulled out of April’s deep hole but remains below its pre-pandemic level, and the currency strengthened as the session wore on. After sliding as low as 92.539 earlier, the lowest since May 2018, the dollar index was last up 0.6% at 93.377. “You had the dollar enter into a very serious decline over the month,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York. “Interest rates are going down, and that makes the dollar much less attractive as a yield play, but (also) the market is starting to become aware of the political risk of the dollar.” “Today, we’re just seeing a little bit of short covering, and a little bit of risk off always creates flows into the dollar.” On Thursday, confidence in the dollar was undermined after U.S. President Donald Trump raised the possibility of delaying the Nov. 3 presidential election. The euro was at $1.1786, down 0.51% on the day. The currency was little moved by data showing the euro zone economy recorded its deepest contraction on record in the second quarter while the bloc’s inflation unexpectedly ticked up in July. The euro traded below $1.10 as recently as May, but after European Union leaders agreed this month to a 750 billion euro economic recovery fund – while also taking on debt jointly in a major boost to regional cooperation – many investors have warmed to the currency again. On a trade-weighted basis, the euro is at its highest since 2014. The dollar’s drop this month has created space for a rebound in currencies hit hard in March, when investors rushed for the safety of the greenback as panic over the coronavirus gripped markets. Against the Japanese yen, the dollar earlier hit a 4-1/2-month low but last stood at 105.77, up 1%. The British pound was at $1.3097, up 0.03% on the day. ======================================================== Currency bid prices at 3:30PM (1930 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1786 $1.1846 -0.51% +5.14% +1.1908 +1.1762 Dollar/Yen JPY= 105.7700 104.7200 +1.00% -2.84% +106.0500 +104.1900 Euro/Yen EURJPY= 124.69 124.06 +0.51% +2.25% +125.2000 +123.8500 Dollar/Swiss CHF= 0.9142 0.9087 +0.61% -5.54% +0.9144 +0.9057 Sterling/Dollar GBP= 1.3097 1.3093 +0.03% -1.22% +1.3169 +1.3081 Dollar/Canadian CAD= 1.3385 1.3422 -0.28% +3.06% +1.3439 +1.3371 Australian/Doll AUD= 0.7142 0.7193 -0.71% +1.71% +0.7227 +0.7134 ar Euro/Swiss EURCHF= 1.0776 1.0768 +0.07% -0.72% +1.0798 +1.0747 Euro/Sterling EURGBP= 0.8998 0.9045 -0.52% +6.43% +0.9063 +0.8981 NZ NZD= 0.6629 0.6698 -1.03% -1.59% +0.6715 +0.6624 Dollar/Dollar Dollar/Norway NOK= 9.0927 9.0746 +0.20% +3.58% +9.1289 +9.0278 Euro/Norway EURNOK= 10.7170 10.7520 -0.33% +8.94% +10.7825 +10.7103 Dollar/Sweden SEK= 8.7723 8.6902 +0.40% -6.15% +8.7957 +8.6431 Euro/Sweden EURSEK= 10.3415 10.2998 +0.40% -1.22% +10.3505 +10.2740 (Reporting by Caroline Valetkevitch; Additional reporting by Thomas Wilkes in London and Hideyuki Sano in Tokyo; Editing by Jan Harvey, David Holmes, Jonathan Oatis and Richard Chang)


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