May 12, 2020 / 4:00 PM / 14 days ago

FOREX-U.S. dollar falls as risk appetite rises, but sentiment tentative

    * Investors eye Fed buying of corporate bonds
    * WHO says some treatment could help COVID-19
    * Graphic: World FX rates in 2019

 (New throughout, updates prices, market activity and comments; new byline, changes dateline; previous
    By Gertrude Chavez-Dreyfuss
    NEW YORK, May 12 (Reuters) - The dollar fell on Tuesday as investor risk appetite rose, boosted by
continued U.S. Federal Reserve action to battle economic devastation caused by the pandemic as well as
potential treatments that the World Health Organization said seemed to be limiting the severity of the
COVID-19 respiratory disease.
    Even a small hint of positive coronavirus news limits the dollar's appeal as a safe-haven currency,
though declines were kept in check by growing fears of a second wave of infections.
    Earlier, renewed U.S.-China trade tensions supported the greenback. 
    "Everybody is feeling a little better right now. The risk sentiment pendulum has swung from negative
in Asia to currently positive," said Erik Bregar, head of FX strategy at Exchange Bank of Canada in
    There are several drivers for the dollar's move, he noted.
    "The Fed buying corporate bond ETFs today is adding to the risk-on move," Bregar said.
    The Fed on Tuesday starts its long-anticipated program to buy corporate bonds and the exchange traded
funds that track them.
    Risk appetite also improved after WHO said some treatments appear to be limiting the severity or
length of the COVID-19 disease and that it was focusing on learning more about four or five of the most
promising ones.            
    That said, analysts said risk-taking has been limited by persistent concerns about the current global
health crisis.
    New coronavirus infections have been found in China, South Korea and Germany, where respective
governments have eased lockdown restrictions.
    A re-emergence of coronavirus cases could dent a global economic recovery on the back of an injection
of monetary and fiscal stimulus.
    In midday trading, the dollar index was down 0.4% at 99.807.
     The greenback was also broadly supported by the possibility of U.S. President Donald Trump
instructing a federal pension fund not to buy Chinese equities, making investors cautious on U.S.-Sino
    The White House on Monday named three nominees to sit on a board that oversees federal employee
pension funds, raising the potential for the reversal of a decision to allow one of the funds to invest in
Chinese companies under scrutiny from Washington.
    The euro was last up 0.6% against the U.S. currency at $1.0865, though still not too far
from the $1.0636 low touched at the end of March when the pandemic sent markets into turmoil.
    The dollar, meanwhile, fell 0.3% against the yen to 107.30.
    The Australian dollar fell earlier, dipping to a five-day low of US$ 0.6432 after China
banned some Australian meat imports. It later pared losses as Australia's trade minister played down the
issue as a technicality and was last trading up 0.3%. 
    It was last up 0.3% at US%0.6510.
    Traders will be looking for Fed Chairman Jerome Powell's speech on current economic issues on
Wednesday, when his views on the future of the monetary policy will be scrutinised closely. 
    Currency bid prices at 11:39AM (1539 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.0865        $1.0806     +0.55%         -3.08%      +1.0884     +1.0785
 Dollar/Yen       JPY=        107.3000       107.6600    -0.33%         -1.43%      +107.6900   +107.2200
 Euro/Yen         EURJPY=     116.58         116.33      +0.21%         -4.40%      +116.8300   +115.9600
 Dollar/Swiss     CHF=        0.9678         0.9729      -0.52%         +0.00%      +0.9750     +0.9667
 Sterling/Dollar  GBP=        1.2305         1.2335      -0.24%         -7.20%      +1.2375     +1.2288
 Dollar/Canadian  CAD=        1.4003         1.4006      -0.02%         +7.83%      +1.4064     +1.3972
 Australian/Doll  AUD=        0.6510         0.6488      +0.34%         -7.28%      +0.6536     +0.6433
 Euro/Swiss       EURCHF=     1.0515         1.0516      -0.01%         -3.11%      +1.0522     +1.0515
 Euro/Sterling    EURGBP=     0.8830         0.8759      +0.81%         +4.45%      +0.8833     +0.8758
 NZ               NZD=        0.6102         0.6079      +0.38%         -9.41%      +0.6122     +0.6043
 Dollar/Norway    NOK=        10.1654        10.2852     -1.16%         +15.80%     +10.3627    +10.1385
 Euro/Norway      EURNOK=     11.0441        11.1344     -0.81%         +12.26%     +11.1855    +11.0219
 Dollar/Sweden    SEK=        9.7392         9.8729      -0.84%         +4.19%      +9.9126     +9.7109
 Euro/Sweden      EURSEK=     10.5836        10.6732     -0.84%         +1.09%      +10.7100    +10.5606
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Olga Cotaga in London and David Gregorio)
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