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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