Investors shrugged off diplomatic tension between Washington and Beijing to focus on China’s economic recovery.
The positive sentiment came after official data from China showed that factory gate deflation eased during June. Although prices fell for a fifth straight month, signs of a pickup suggest a slow but steady recovery remains intact.
Also, China’s markets continued their recent rally, with the blue-chip CSI300 index soaring to a five-year high on Thursday. Chinese stocks set their longest winning streak in two years and the yuan had strengthened past 7 per dollar overnight.
State-run media warned on Thursday that investors should still pursue rational investments and manage risks. But that did not rein in the bulls.
Despite rising tension over Hong Kong and the economic uncertainty caused by COVID-19, China’s economic recovery improves risk sentiment.
Dollar’s downward momentum also lifted sentiment. The greenback traded near multi-week lows. It was at a one-month low against the euro, a three- week low versus the British pound and four-month lows against the Swiss franc.
Trade- and commodity- related currencies also reacted to China’s gains. The New Zealand dollar was at the highest since January and the Aussie dollar at a one-month high.
Elsewhere, German export figures recovered less than expected in May. Demand remained subdued despite lockdowns being lifted in large parts of Europe. They jumped by 9% on the month after diving by 24% in April. But economists had been hoping for a near 14% bounce.
Meanwhile, Britain’s finance minister promised an additional $38 billion to try to head off an unemployment crisis.
Global coronavirus cases exceeded 12 million on Wednesday, with more than half a million dead. In the United States, cases have been on the rise in 42 of the 50 states over the past two weeks
START TRADINGForex – China’s economic recovery lifts sentiment
The United States has also posted its largest number of daily new coronavirus cases since the outbreak began and global tensions are on the rise. U.S. jobs data due at 1230 GMT will offer the next checkup on the recovery’s progress.
The dollar fell against most currencies on Thursday as a rally in riskier assets put a dent in safe-haven demand for the greenback.
The New Zealand dollar rose to $0.6590, the highest since late January.
The euro was up 0.2% at $1.1355 even after German export data failed to meet analysts’ expectations. The common currency jumped earlier to a one-month high of $1.1371.
Sterling edged up 0.4% amid delayed response to Sunak’s economic plans to revive the economy, while Brexit risks continued to weigh.
But the pound was up on Thursday to $1.2655 at 1005 GMT against a broadly weaker dollar. Versus the euro, sterling rose 0.3% to 89.55 pence.
In commodity markets, oil prices remained slightly unchanged. Brent crude futures were up 5 cents, or 0.12%, to $43.34 by 1139 GMT, after gaining 0.5% on Wednesday. U.S. WTI crude futures dipped 14 cents, or 0.3%, to $40.76, after rising 0.7% the previous day.
Gold, the haven asset hit a nine-year high on Wednesday, held its gains and it was up 0.2% at $1,810.00 per ounce. Silver gained 1.1% to $18.98, having earlier hit its highest since September 2019 at $19.02.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money