Home Forex Dollar holds firm on coronavirus concerns

Dollar holds firm on coronavirus concerns

by Jonathan Adams
euro

The euro eased to $1.1221, after hitting a one-week peak of $1.1348 on Tuesday though the currency has maintained weekly gains of about 0.4%

The dollar held firm on Friday as caution over rapid rises in U.S. coronavirus cases cast doubt over the reopening of the economy, keeping the allure of its safe-haven value.

The dollar index stood at 97.360, having pared a large part of this week’s losses.

Against the yen, the dollar traded at 107.17 yen, having gained 0.5% in the overnight session.

The euro eased to $1.1221, losing steam after hitting a one-week peak of $1.1348 on Tuesday though the currency has maintained weekly gains of about 0.4%.

Sterling slipped to $1.2422, off this week’s high of $1.2541 touched on Wednesday.

Also supporting the greenback was the broader rise in corporate demand typically seen towards the end of the month. That helped the dollar stay firm despite the stubbornly upbeat risk appetite seen in global equity markets, which comes even as new coronavirus infections surge.

The governor of Texas temporarily halted the state’s reopening on Thursday as Covid-19 infections and hospitalizations surged and new daily cases around the country climbed to record levels.

When you look at things like restaurant bookings data, it looks as if they are heading back to square one after a strong recovery, said Kyosuke Suzuki, director of forex at Societe Generale. If this continues day by day, people will likely have to review their recovery scenario.

Data on Thursday showed weak demand is forcing U.S. employers to lay off workers, keeping new applications for unemployment benefits extraordinarily high, even as businesses have reopened.

Initial claims for state unemployment benefits stood at a seasonally adjusted 1.48 million for the week ended June 20, down 60,000 from a week earlier but still double their peak during the 2007-2009 Great Recession.

More economic data is due next week, including U.S. jobs and manufacturing surveys but ahead of that trade could be moved by month-end and quarter-end flows, traders said.

Elsewhere, the Australian dollar fetched $0.6891, stuck in its rough $0.68-0.70 range in the past couple of weeks.

The Turkish lira stood flat after the country’s central bank unexpectedly halted a nearly year-long easing cycle on Thursday, by keeping its key interest rate unchanged at 8.25% and citing upward pressure on inflation.

The lira stood at 6.8538 per dollar.

The Mexican peso hovered above a one-month low after Banxico, the country’s central bank cut its interest rates by 50 basis points as expected late on Thursday.

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