June 11, 2020 / 2:58 PM / 21 days ago

FOREX-Yen, franc advance after Fed's bleak outlook, worry over second wave of infections

    * Yen rises to 1-month high; Swiss franc hits 3-month peak
    * U.S COVID-19 infections rise, fears of 2nd wave mount
    * U.S. jobless claims fall, producer prices rise
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

 (Adds new comment, U.S. data, FX table, updates prices, changes byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, June 11 (Reuters) - The safe-haven Japanese yen and Swiss franc gained on Thursday, as
expectations receded that the global economy would recover swiftly from the coronavirus pandemic after a
U.S. central bank policy meeting.
    The yen rose to a one-month high against the dollar, while the Swiss franc climbed to a fresh
three-month peak.
    The Fed, after a two-day meeting, signaled on Wednesday that it plans years of extraordinary support
for the U.S. economy, which policymakers project will shrink by 6.5% in 2020, and the  unemployment rate
will be 9.3%. Interest rates are also expected to remain near zero until the end of 2022.
    Investors were also worried about new coronavirus infections as the world gradually reopened following
shutdowns aimed at curbing the spread of the disease.
    Shaun Osborne, chief FX strategist, at Scotiabank in Toronto said the Fed's dire pronouncement
squashed "all over the stock market's idea of a V-shaped rebound."
    He said the market was also concerned about signs of a second wave of virus infections, with a jump in
cases noted in Seoul and signs from some U.S. states that reopened earlier of an increase in new cases.
    In the United States, new infections are rising slightly after five weeks of declines, according to a
Reuters analysis. Part of the increase is due to more testing, which hit a record high on June 5 of
545,690 tests in a single day but has since fallen.
    "With risk appetite chilled, FX markets have reverted to something more of a traditional response—the
Swiss Franc and Yen are outperforming," Osborne added.  
    In mid-morning trading, the dollar fell 0.5% against the yen to 106.64 yen, after earlier
dropping to a one-month trough.
    The dollar also slid to a three-month low versus the Swiss franc of 0.9399 franc, and was
last at 0.9401 franc.
    Against a basket of its rivals, the dollar weakened 0.1% to 96.07.
    The dollar showed little reaction following data that indicated U.S. initial jobless claims fell to a
seasonally adjusted 1.542 million for the week ended June 6, from 1.897 million the prior week. That
pulled initial claims further away from a record 6.867 million in late March.
    U.S. producer prices, however, were higher, up 0.4% in May, amid a surge in the cost of meat.

    The euro rose, leaving open the possibility of more downside for the dollar once the dust settles. The
single currency was last up 0.3% at $1.1397.
    High-beta currencies heavily geared towards global growth, such as the Australian dollar and
the Norwegian crown, led losers in the currency space, falling more than 1% against the dollar.
    
    ========================================================
    Currency bid prices at 10:33AM (1433 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1395        $1.1369     +0.23%         +1.65%      +1.1403     +1.1326
 Dollar/Yen       JPY=        106.6400       107.0900    -0.42%         -2.04%      +107.2300   +106.6200
 Euro/Yen         EURJPY=     121.52         121.83      -0.25%         -0.35%      +121.9000   +121.2500
 Dollar/Swiss     CHF=        0.9392         0.9444      -0.55%         -2.96%      +0.9460     +0.9396
 Sterling/Dollar  GBP=        1.2669         1.2745      -0.60%         -4.45%      +1.2754     +1.2635
 Dollar/Canadian  CAD=        1.3521         1.3411      +0.82%         +4.12%      +1.3531     +1.3398
 Australian/Doll  AUD=        0.6918         0.6997      -1.13%         -1.47%      +0.7004     +0.6882
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.0703         1.0734      -0.29%         -1.37%      +1.0747     +1.0690
 Euro/Sterling    EURGBP=     0.8991         0.8921      +0.78%         +6.35%      +0.8995     +0.8921
 NZ               NZD=        0.6489         0.6538      -0.75%         -3.67%      +0.6545     +0.6464
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        9.4416         9.2791      +1.75%         +7.55%      +9.4898     +9.2835
 Euro/Norway      EURNOK=     10.7580        10.5640     +1.84%         +9.34%      +10.7694    +10.5659
 Dollar/Sweden    SEK=        9.1968         9.1796      +0.41%         -1.61%      +9.2736     +9.1615
 Euro/Sweden      EURSEK=     10.4822        10.4397     +0.41%         +0.12%      +10.5138    +10.4429
 
    
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Saikat Chatterjee in London; Editing by
Bernadette Baum)
  
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