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Dollar in narrow range as U.S. virus cases grow

TOKYO (Reuters) – The dollar was hemmed into a narrow range on Friday, supported by safe-haven flows as a resurgence of the coronavirus in the United States discouraged some investors from taking on excessive risk.

The yuan was stable in offshore trade before data on China’s services sector, but investors may avoid taking big positions due to worries about diplomatic friction between Washington and Beijing over civil liberties in Hong Kong.

The U.S. economy added more jobs than expected in June, data showed on Thursday, but reaction in the currency market has been muted because another spike in coronavirus infections threatens to once again put the breaks of economic activity.

“New infections in the United States have been on an uptrend since June,” said Junichi Ishikawa, senior foreign exchange strategist at IG Securities.

“The market is leaning more toward buying the dollar, particularly against emerging market currencies, because the dollar is considered the safest asset around.”

Against the euro EUR=D3, the dollar was quoted at $1.2395 on Friday in Asia.

The dollar held steady at 0.9469 Swiss franc CHF=D3 on Friday after three straight days of gains.

The British pound GBP=D3 traded hands at $1.2471.

The dollar was little changed at 107.50 yen JPY=EBS.

A wave of coronavirus infections has prompted the halting of or back-pedalling on plans to reopen economic activity in several U.S. states after months of strict lockdowns.

Officials are also taking steps to curtail activity during the extended Independence Day holiday weekend starting on Friday.

Trading in currency markets on Friday may be subdued before the U.S. holiday, but analysts say sentiment favours more gains in the dollar as investors turn cautious.

Relations between the United States and China are also in focus.

The U.S. Senate unanimously approved legislation on Thursday to penalize banks doing business with Chinese officials who implement Beijing’s new national security law for Hong Kong, raising the chances of further friction between the world’s two- largest economies.

In the offshore market, the yuan CNH=D3 was little changed at 7.0732 per dollar.

The Australian dollar AUD=D3 held steady at $0.6917 on Friday before data expected to show a sharp rebound in retail sales in May.

Across the Tasman Sea, the New Zealand dollar NZD=D3 traded at $0.6509.

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Dollar on defensive as investors await U.S. jobs data

TOKYO/SINGAPORE (Reuters) – The dollar was on the defensive against more growth-sensitive currencies on Thursday, following upbeat U.S. and European economic data, though worries about the coronavirus blunted more aggressive risk taking ahead of upcoming U.S. jobs figures.

The New Zealand dollar NZD=D3 led modest gains in Asia, edging ahead by 0.2% to a one-week high of $0.6492. [AUD/]

Against a basket of currencies, the greenback slipped marginally and is tracking toward its worst week in a month, with a 0.4% fall – though it could shift significantly in either direction depending on U.S. jobs data due at 1230 GMT.

Non-farm payrolls figures are expected to show an increase of 3 million jobs last month. But estimates vary widely and the data comes as concerns grow about whether the U.S. economy can sustain its recovery as coronavirus infections surge and some states reimpose limits on business and personal activity.

“Any reasonable reaction to this number must also price in the resurgence in cases,” said Vishnu Varathan, head of economics at Mizuho Bank in Singapore, adding that a strong beat is needed to boost sentiment.

“A shortfall, particularly even one that may be mildly negative, would quickly reinforce the shadows of doubt being cast on plans for unfettered re-openings,” he said.

A miss would probably push U.S. Treasury yields lower, Varathan added, but he said the dollar’s response is less predictable and dependent on whether investors regard hiccups in the U.S. recovery as a challenge to the global rebound.

“Given the programmes in place, a weak number is unambiguously weak,” said Steve Englander, global head of G10 FX research at Standard Chartered in New York.

“A strong number could reflect economic improvement or fiscal incentives to hire.”

FINE BALANCE

Supporting sentiment in the meantime was news that a COVID-19 vaccine developed by German biotech firm BioNTech (BNTX.O) and U.S. pharmaceutical giant Pfizer (PFE.N) showed potential in early-stage human trials.

U.S. manufacturing activity also rebounded more than expected in June, with the Institute for Supply Management’s manufacturing activity index hitting its highest in 14 months.

Similar surveys from China, Germany and France all pointed to an improvement in factory activity, while the ADP National Employment Report showed June private payrolls added nearly 2.4 million jobs.

Still, re-openings are stalling in the U.S. as case numbers surge. New cases of COVID-19, the illness caused by the coronavirus, shot up by nearly 50,000 on Wednesday, the biggest one-day spike since the start of the pandemic.

The safe-haven Japanese yen JPY= hung on to overnight gains to hold steady at 107.53 yen per dollar, pointing to elevated investor caution.

Elsewhere the euro changed hands at $1.1257 EUR=, maintaining its gain of 0.3% since the start of week.

The mood also lifted sterling GBP=D4 above $1.25 for the first time in a week, and it last sat at $1.2483, having bounced almost 2% from a one-month low hit on Monday.

Analysts expect the pound could be about 4% stronger in a year’s time, if Britain and the European Union can thrash out a trade deal, a Reuters poll has found.

Broadly, poll respondents expect the dollar to slowly decline over the coming year, though that depends on there being no second shock from the coronavirus.

“If we see further spikes in coronavirus cases, I would expect both the dollar and the yen to strengthen against other currencies,” said Tohru Sasaki, head of Japan market research at J.P. Morgan.

Graphic: World FX rates in 2020 here

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Dollar steadies, yen gains; European economic data in focus

LONDON (Reuters) – Currency traders were broadly cautious in early London trading on Wednesday, with the Japanese yen seeing its first session of gains in more than a week, before key European and U.S. economic data.

The dollar rose overnight before erasing gains, ahead of U.S. manufacturing data for June, which is expected to show a rebound in activity. The dollar was up around 0.2% on the day at 97.407 against a basket of currencies at 0732 GMT =USD,

“Even if surprising on the upside, markets are likely to take the forward-looking indicator with caution given the rising Covid-19 cases in the US,” ING wrote strategists in a note to clients.

European economic data was also in focus, with eurozone manufacturing PMI due at 0800 GMT, and German unemployment data at 0755 GMT.

The euro was broadly flat on the day, at $1.12275 EUR=EBS.

“In line with the generally calmer trend in FX markets, EUR/USD should stay around 1.1200 today,” ING strategists said.

Investors have been betting that the surge in new infections in the U.S. south and southwest will not derail a broader global economic recovery.

But new U.S. COVID-19 cases rose by more than 47,000 on Tuesday, according to a Reuters tally, the biggest one-day spike since the start of the pandemic, as the government’s top infectious disease expert said that number could soon double.

The European Union has excluded the United States from its initial “safe list” of countries from which the bloc will allow non-essential travel from Wednesday.

A localised lockdown of more than 300,000 people in the suburbs north of Melbourne in Australia will start for a month on Wednesday, after two weeks of double-digit rises in new coronavirus cases in Australia’s second most populous state.

The Japanese yen rose around 0.3% versus the dollar, to 107.635, its first session of significant gains in more than a week JPY=EBS.

The riskier Australian and New Zealand dollars fell in overnight trading before recovering in early London trading. Versus the dollar, the Aussie was at 0.6908 and the kiwi at 0.6458 AUD=D3 NZD=D3.

Geopolitical tensions also contributed to investor caution, and China made the first arrest under new national security law which limits the freedom and autonomy of Hong Kong.

The United States and its Asian and Western allies criticised the authoritarian legislation. Washington said it would continue to take strong action against China.

The Swedish crown was broadly flat after the Riksbank kept rates unchanged 0%.

After a spike in March, the crown recovered to its pre-coronavirus levels at the start of May and has been broadly stable since. Versus the euro, it was at 10.466 on Wednesday, down around 0.1% on the day EURSEK=D3.

“SEK is clearly the market’s favourite amongst the Nordic currencies,” wrote Antje Praefcke, Commerzbank FX strategist, in a note to clients. “NOK is suffering as a result of the double burden caused by the low oil price and the corona lockdown, whereas SEK is benefitting from the Swedish government’s and central bank’s diverse approach.”

Versus the euro, the Norwegian crown rose around 0.3% to a one-week high of 10.7785 EURNOK=D3.

Graphic: World FX rates in 2019 here

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Dollar holds gains versus yen before major economic data

TOKYO (Reuters) – The dollar held onto gains against the yen on Wednesday ahead of data expected to show U.S. manufacturing activity and hiring continued to recover from the economic shock caused by the coronavirus pandemic.

The euro was hemmed into a narrow range as traders awaited data on Germany’s manufacturing sector, retail sales, and the jobless rate to gauge the health of the eurozone economy.

A surge in coronavirus infections in the U.S. south and southwest has worried some market participants, but most investors are betting this will not be enough to derail a broader rebound in the global economy.

“The dollar will be supported against the yen if U.S. economic data are positive, but U.S. yields are not rising much because of speculation about yield curve control,” said Shusuke Yamada, head of foreign exchange and Japan equity strategy at Merrill Lynch Japan Securities.

“The euro looks stable, but there are questions about Brexit and the pace of economic reopening, which means the euro could soon be overvalued.”

The dollar traded at 107.99 yen JPY= in Asia on Wednesday, close to the highest in three weeks.

The mood for the yen soured after Bank of Japan data showed business sentiment fell to an 11-year year low.

The euro EUR=D3 held steady at $1.1234. Against the British pound, the common currency EURGBP= traded at 90.65 pence following a 0.9% decline on Tuesday.

Sterling GBP=D3 bought $1.2394 as it held on firmly to the previous session’s gains, but traders may be reluctant to buy the pound further due to worries about Britain’s trade negotiations with the European Union.

The U.S. Institute for Supply Management’s purchasing managers’ index (PMI) for manufacturing due later on Wednesday is forecast to show that activity in June continued to recover from an 11-year low marked in April, when the coronavirus paralysed large swathes of the global economy.

Investors also await the closely-watched U.S. nonfarm payrolls report on Thursday, which is expected to show the economy added 3 million jobs in June.

The dollar has managed to remain strong against the yen due to signs of economic revival, but the greenback has failed to make headway against commodity currencies, showing that some investors remain wary of downside risks.

Normally Treasury yields would rise due to an improving economy, but benchmark 10-year yields US10YT=RR have moved in a narrow range around 0.65% since mid June, when Federal Reserve Chairman Jerome Powell said policymakers discussed yield curve control, which can be used to cap bond yields.

The Australian dollar AUD=D3 bought $0.6895 on Wednesday following a 0.5% gain on Tuesday.

The New Zealand dollar NZD=D3 stood at $0.6447, also holding onto gains from the previous session.

The Swiss franc CHF=D3, a currency traditionally sought as a safe haven during times of heightened risk, also perked up against the greenback, which shows that positive economic data alone is not enough to support broad-based dollar gains.

The euro has lacked conviction amid mixed signals about the eurozone economy and limited progress in talks on the future trade relationship between Britain and the EU.

Data due later on Wednesday from Germany are expected to show retail sales in Europe’s largest economy fell at a slower pace but the manufacturing sector continued to contract, which could hurt sentiment for the euro.

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Dollar edges lower amid uncertain U.S. outlook

NEW YORK (Reuters) – The dollar slipped on Tuesday, alternating between gains and losses, as markets digested less bearish comments from U.S. monetary officials along with a more dire prognosis from the country’s top medical expert on the spread of the novel coronavirus.

The dollar gained against the euro and the yen, but fell versus sterling, the Swiss franc, and commodity currencies such as the Australian, New Zealand and Canadian dollars.

Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell, in testimony before the U.S. House of Representatives Financial Services Committee on Tuesday, suggested a willingness to do more for the U.S. economy as it battles the enormous fallout from the virus outbreak.

Mnuchin said he is working with the House and the Senate to pass more coronavirus relief by the end of July, while Powell said the Fed can lower the minimum loan threshold under the Main Street lending program in the future.

On the other hand, Dr. Anthony Fauci, the head of the National Institute of Allergy and Infectious Diseases, in remarks to a Senate committee on Tuesday warned of the risks of a surge in cases and said the country should not bank on the availability of a safe and effective COVID-19 vaccine.

In early afternoon trading, the dollar index slipped to 97.380. For the quarter and month, the dollar fell 1.6% and nearly 1.0%, respectively. It was the worst monthly performance for the dollar since December.

“The dollar is consolidating right now,” said Marc Chandler, chief market strategist, at Bannockburn Forex in New York.

“The upside on the dollar really began on June 10 and so I think we can see one more leg up in the dollar,” he said. “As we get into July, there is some uncertainty — today for example is the last day of the PPP (payroll protection program) and at the end of next month is the end of the unemployment claims, unless it gets extended.”

There are concerns as well on the resurgence in U.S. coronavirus cases.

The United States saw a 46% increase in new cases of COVID-19 in the week ended June 28 compared with the previous seven days, with 21 states reporting positive test rates above the level that the World Health Organization has flagged as concerning.

In other currencies, the dollar gained 0.3% versus the yen, to 107.93 yen JPY=EBS.

The euro inched lower against the dollar to $1.1234. It was earlier pressured by data showing underlying price pressures dropped again in the euro zone.

Over the quarter, the euro staged a 1.6% comeback after falling by a similar margin during the first three months of the year. For the month of June, the euro was up 0.9%.

Traders said there remains a barrier of $1.1200 for the euro on the downside.

Sterling reversed losses against the dollar to trade up 0.2% at $1.2328 GBP=D3. The pound fell earlier after data showed the economy shrank by 2.2% between January and March, its worst performance since 1979, as households slashed spending.

The Swiss franc CHF=EBS gained against the dollar. The greenback was last down 0.5% at 0.9467 franc CHF=EBS.

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Grim data keeps euro, sterling under pressure

LONDON (Reuters) – A fresh batch of grim economic data kept the euro and the pound under pressure on Tuesday as sentiment faltered amid fears new COVID-19 hot spots across the world might jeopardise the swift recovery from the pandemic investors are hoping for.

The common currency lost further ground against the dollar in morning trading after underlying price pressures dropped again in the euro zone, underscoring fears that consumer price growth will remain anaemic for years.

Separately, Britain’s Office for National Statistics said the economy shrank by 2.2% between January and March, its worst performance since 1979, as households slashed their spending. [L8N2E714Z]

“It’s undeniable that today’s data is not flattering, for both UK and Euro zone”, commented Ricardo Evangelista, senior analyst at ActivTrades.

“Today’s numbers offer support to the dollar, especially as concerns are growing over a second wave of the coronavirus pandemic”, he added.

The euro EUR=EBS fell as low as $1.1199, losing close to 0.4%, before picking up slightly towards midday.

Over the quarter, the European currency staged a 1.7% comeback after falling by a similar margin during the first three months of the year marked by the coronavirus financial market crash.

Sterling traded at $1.2280 GBP=D4 after sliding to a one-month low of $1.2252 on Monday when concerns about how Britain’s government would pay for its planned infrastructure programme added to worries about its ability to seal a trade pact with the European Union.

Against a basket of currencies, the dollar index was up 0.21% at 97.632, holding on to overnight gains after upbeat U.S. home sales boosted Wall Street.

“From the market’s point of view there is therefore nothing speaking in favour of the euro this morning, in particular in comparison to the surprisingly strong US home sales data yesterday”, said Commerzbank FX strategist Esther Reichelt.

Market have been torn between in the past trading days between some positive economic developments, notably a rebound in factory activity in China, and a seemingly resurgent pandemic.

California and Texas saw record rises in new infections on Monday while in Britain, a reinforced lockdown was imposed in the city of Leicester.

A warning from U.S. Federal Reserve Chair Jerome Powell that the outlook for the world’s biggest economy was “extraordinarily uncertain”, also kept investors on their toes.

“Markets are jumpy. Tension remains between economic and virus pickup,” said Moh Siong Sim, an FX analyst at the Bank of Singapore.

The safe-haven Swiss franc CHF=EBS slipped marginally. The dollar rose 0.1% against the franc to 0.9506 while it also climbed against the Japanese yen, another currency considered a safe store of value, and was last up 0.1% to 107.73 yen JPY=.

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REFILE-CANADA FX DEBT-Canadian dollar holds near a 10-day low as coronavirus cases climb

 (Adds missing word in headline)
    * Canadian dollar rises 0.1% against the greenback
    * Price of U.S. oil dips 0.3%
    * Canadian payroll employment falls by 1.8 million in April 
    * Canadian bond yields fall across a flatter curve

    TORONTO, June 25 (Reuters) - The Canadian dollar edged
higher against its U.S. counterpart on Thursday but held near an
earlier 10-day low as investors worried that a rise in American
coronavirus cases could slow economic recovery.
    World stocks spluttered to their lowest level in over a week
as a surge in U.S. coronavirus cases and an IMF warning of a
nearly 5% plunge in the global economy this year hit the bulls
again.             
    Canada is a major exporter of commodities, including oil, so
the loonie tends to be sensitive to the global economic outlook.
    Oil was pressured by record-high U.S. crude inventories as
well as the resurgence in coronavirus cases that casts doubt on
a recovery in fuel demand. U.S. crude oil futures        were
down 0.3% at $37.88 a barrel, extending the previous day's sharp
decline.             
    The Canadian dollar        was trading 0.1% higher at 1.3620
to the greenback, or 73.42 U.S. cents. The currency touched its
weakest intraday level since June 15 at 1.3666.
    The 10-day low for the loonie follows news on Wednesday that
Canada lost one of its coveted triple-A ratings when Fitch
downgraded it for the first time. Also this week, investors have
worried that Washington could reimpose tariffs on Canadian
aluminum.                         
    Canadian payroll employment fell by 1.8 million in April as
non-essential businesses were closed across the country, data
from Statistics Canada showed on Thursday. That brought total
job losses since February to 2.8 million, or 16%, which is
consistent with data from the labor force survey, the national
statistical agency said.
    The labor force survey has since showed that Canada
unexpectedly added almost 290,000 jobs in May as some provinces
loosened COVID-19 restrictions on businesses.             
    Canadian government bond yields were lower across a flatter
curve, with the 10-year             down 3.6 basis points at
0.512%.

 (Reporting by Fergal Smith; Editing by Steve Orlofsky)
  

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Dollar gains on coronavirus, tariff concerns

NEW YORK (Reuters) – The dollar gained on Wednesday as a rise in coronavirus cases in the United States weighed on optimism about a quick economic recovery, and as the U.S. weighed tariffs on European products.

Arizona, California, Mississippi and Nevada on Tuesday reported record numbers of new cases of COVID-19, the disease caused by the novel coronavirus, while Texas set a record on Monday.

“The positive market mood during yesterday’s North American session on economic rebound optimism stalled overnight as concern may be building in overseas markets over rising COVID-19 case counts in the U.S.,” analysts at Scotiabank said in a report.

The coronavirus pandemic is causing wider and deeper damage to economic activity than first thought, the International Monetary Fund said on Wednesday, prompting the institution to slash its 2020 global output forecasts further.

Concerns about an increase tariffs also weighed on risk sentiment, and boosted demand for the greenback.

The United States is weighing its tariffs on European products and is considering changing rates for various products as part of the trading partners’ aircraft dispute, according to a notice by the Office of the U.S. Trade Representative on Tuesday.

The dollar index USD= gained 0.33% to 96.45. It has fallen from a three-year high of 102.99 in March.

The euro EUR= fell 0.32% to $1.1270. It had reached a one-week high of $1.1348 on Tuesday after data showed that a downturn in the euro zone economy eased again this month.

The greenback rose 0.19% to 106.71 Japanese yen JPY=. It fell as low as 106.06 yen on Tuesday, the weakest since May 7.

The New Zealand dollar underperformed after the country’s central bank said the balance of economic risks remains to the downside and that it is prepared to use additional monetary tools as necessary.

The kiwi NZD= was last down 0.91% at $0.6430.

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