Dollar keeps safe-haven bid as resurgent virus threatens recovery

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 demand for the safe-haven currency intact.

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

Against the yen, the dollar traded at 107.09 yen, having gained 0.5% in the overnight session. It has held gains of 0.2% so far this week.

The euro eased to $1.1223, 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 towards the end of quarter.

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 U.S. health crisis continued as new daily cases around the country climbed to record levels and governor of Texas temporarily halted the state’s reopening as infections and hospitalisations surged.

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.

Dollar keeps safe-haven bid as resurgent virus threatens recovery, Reuters, Jun 26