Daily Outlook

Dollar stable, markets torn between upbeat data and virus fears

The dollar held on to modest gains on Tuesday as upbeat U.S. home sales and Chinese factory data left traders torn between optimism about global growth rebounding and fears a surge in new COVID-19 cases could jeopardise a swift V-shaped recovery. California and Texas saw record rises in new infections on Monday while in Britain, a reinforced lockdown was imposed in the city of Leicester.

News on the economic front was far better with Wall Street getting a boost from the U.S. housing market quickly recovering in May from a plunge triggered by the pandemic. A warning from U.S. Federal Reserve Chair Jerome Powell that the outlook for the world’s biggest economy was “extraordinarily uncertain”, however, kept investors on their toes. Against a basket of currencies, the dollar index was up 0.27% at 97.686 while the euro lost 0.3% at $1.1209.

Earlier the Chinese yuan and the Australian dollar gained slightly after a survey showed China’s factory activity expanded at a stronger pace in June, beating expectations of slowdown from last month. The offshore yuan rose 0.1% to 7.072 per dollar while the Aussie dropped 0.2% to $0.6854. The market shrugged off news that China’s parliament passed national security legislation for Hong Kong. That came after the United States earlier began eliminating Hong Kong’s special status under U.S. law.

Dollar stable, markets torn between upbeat data and virus fears, Reuters, Jun 30

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