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FOREX-Yuan extends gains to 16-month high as China data boosts risk appetite

Tue, 15th Sep 2020 12:49

* China's yuan surges to 16-month high on economic data

* Australian dollar gains

* U.S. dollar edges down

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
(Updates throughout)

LONDON, Sept 15 (Reuters) - Risky currencies gained on
Tuesday, with the yuan strengthening to a 16-month high after
Chinese data pointed to an economic recovery and the Australian
and New Zealand dollars climbing, while the dollar fell.

China's industrial output accelerated and retail sales grew
for the first time this year, beating analysts' forecasts, data
overnight showed.

The yuan surged in both offshore and onshore trading. The
offshore yuan carried on strengthening throughout the European
session, hitting new 16-month highs of 6.7685 versus the U.S.
dollar at 1100 GMT.

The Australian dollar rose after minutes of its central bank
meeting showed no signs of a further cut to record-low interest
rates. At 1111 GMT, it was at 0.73355, up 0.6% on the day
.

The New Zealand dollar was up 0.4% versus the U.S. dollar
, while the Canadian dollar rose around 0.2%.

"It's a proper risk-on day today," said Kit Juckes, head of
FX strategy at Societe Generale. "China is an economic winner at
this point in the pandemic."

"There's a sense that the virus is less of a threat in China
now, and also perhaps more widely the market is looking for a
more V-shaped global economic recovery."

The Swedish crown was up around 0.2% at 8.7425
while the Norwegian crown fell around 0.1%, taking a
hit as oil prices extended their fall.

The U.S. dollar slipped, although it recovered some of its
overnight losses in early London trade, leaving the dollar index
0.3% lower on the day at 92.801.

U.S. industrial production data is due at 1315 GMT, while
the market is looking ahead to the Federal Reserve's two-day
policy meeting starting on Wednesday.

"Another good August industrial production figure out of the
U.S. today should maintain the positive mood going into
tomorrow's FOMC meeting," ING strategists wrote in a note,
adding the dollar index could still drift down to 92.50.

The euro was up 0.3% versus the dollar at $1.1895.
Investor sentiment in Germany rose in September, despite
headwinds from Brexit and rising coronavirus infections, the ZEW
economic sentiment survey showed.

The pound rose after better-than-expected jobs data.

The positive sentiment in currency markets was also
attributed to hopes for a COVID-19 vaccine. British drugmaker
AstraZeneca restarted its vaccine trial in Britain on Saturday
though it remains on hold in the United States.

(Reporting by Elizabeth Howcroft; Editing by Kirsten Donovan
and Jan Harvey)

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