FOREX-Dollar Resumes Fall as Stock Markets Tentatively Recover

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Band Iain Withers

LONDON, May 30 (Reuters)The U.S. dollar resumed its slide on Monday as risk appetite in the markets temporarily strengthened, supported by encouraging economic data and bets that the Federal Reserve will tighten policy at a slower pace.

The dollar index – which tracks the greenback against six major rivals – is on course for its first monthly decline in five as the safe-haven currency loses steam after a frenzied start to the year.

The dollar index is on track for a drop of more than 1.5% in May – although it remains up around 6% on the year. It was down 0.2% on the day at 101.510.

Trade is expected to be light through Monday as U.S. stock and bond markets close for the Memorial Day holiday.

Data on Friday showed that consumer spending in the United States rose more than expected in April as households increased their purchases of goods and services and the rise in inflation slowed.

Analysts said encouraging data, coupled with bets on a more cautious tightening path from the Fed, was weakening the dollar.

Global stock markets rose on Monday as the easing of COVID-19 restrictions and new stimulus measures in China helped support last week‘s rebound.

The overseas-traded Chinese yuan strengthened 1% against the dollar on the reopening and last rose 0.6% to 6.6802 yuan to the dollar. CNH=D3

“How the U.S. consumer behaves here and from a global perspective, the performance of the Chinese economy will be crucial determinants of investors’ broader appetite for risk,” currency analysts said. from MUFG in a note.

A slew of new economic data is due this week that could give clues to global growth prospects, including US jobs numbers and Chinese Purchasing Managers’ Index numbers.

Inflation data from Germany and Spain showed on Monday that price increases accelerated in May, pushed by soaring energy prices, ahead of euro zone inflation figures on Tuesday.

Inflation data helped limit the euro’s gains, with the single currency lately rising 0.2% to $1.07600, after hitting a monthly high of $1.07810. EUR=EBS

The safe haven yen fell 0.4% to 127.605 yen per dollar. GBP=D3

The British pound edged up 0.1% to $1.26350. GBP=D3

Cryptocurrencies attempted a rebound but bitcoin BTC=BTSPwhich was up 4%, is still pinned around $30,000.

Global exchange rateshttps://tmsnrt.rs/2RBWI5E

Dollarhttps://tmsnrt.rs/3GzVRgi

Yuanhttps://tmsnrt.rs/3NMf1Sy

(Reporting by Iain Withers, Additional reporting by Sujata Rao in London and Tom Westbrook in Singapore, Editing by Catherine Evans and Bernadette Baum)

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