By Tom Westbrook
SINGAPORE (Reuters) – The dollar fell on Friday as a news report on signs of success in a COVID-19 treatment drug trial as well as early plans to re-open the U.S. economy drove fresh optimism and risk appetite.
Even the first drop in Chinese economic growth since quarterly records began in 1992 did not dent the mood as investors sought silver linings in signs of a rebound in industrial production.
The Australian and New Zealand dollars led gains, with both rising about 0.8%, while the pound and euro also rose to recoup some of the past two days’ losses.
Medical news website STAT, citing a recorded discussion between doctors involved in a clinical trial, said most of 125 patients given Gilead’s (O:) remdesivir drug at a hospital in Chicago had recovered and been discharged.
Gilead said anecdotal reports do not provide the data needed to determine the safety or efficacy of remdesivir as a treatment for COVID-19 and that it expects more data will be available at the end of the month.
“The market is looking for good news – grasping and hoping and praying,” said Imre Speizer, FX analyst at Westpac. “People just want to get on the positive bandwagon.”
The dollar last sat at $1.0866 per euro () and $1.2504 per pound
The dollar has closely tracked risk sentiment through the coronavirus crisis and remains at elevated levels as the safety of cash in the world’s reserve currency stays in demand.
Friday’s dip reverses two days of gains on warnings of a Great Depression-style slump in the world economy, though it is set to end the week steady as optimism returns. [MKTS/GLOB]
U.S. President Donald Trump on Thursday announced guidelines for a return to work in the world’s biggest economy – a gradual, three-stage process dependent on robust virus testing and subject to state governors’ discretion.
But the crisis has already turned some 22 million Americans out of work, and further market moves were capped by Gilead’s staid response and more worries on the economic outlook.
China’s economy shrank 6.8% in the first quarter, the first reversal since at least 1992, as the coronavirus outbreak paralysed production and spending.
Yet the decline was largely in line with expectations for a 6.5% contraction, and investors were encouraged by a less-than-expected 1.1% drop in industrial output.
“It shows the economy is gradually recovering from the very worst,” said Nathan Chow, senior economist at DBS in Hong Kong.
“But I think in the second quarter we will see at most a stabilisation, not a rebound, because cases are still rising for most of China’s trading partners, which will dampen orders going forward. Based on this first-quarter number, I would say the whole year GDP growth would be something around 2%.”
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