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Dollar on defensive as upbeat data dulls safe-haven appeal

07/01/2020 | 08:58pm EST
Illustration photo of a U.S. Dollar note

By Hideyuki Sano

The dollar was on the defensive against more growth-sensitive currencies on Thursday, following upbeat U.S. and European economic data but renewed worries about the coronavirus blunted more aggressive risk taking.

The market sentiment gained an additional boost from the news that a COVID-19 vaccine developed by German biotech firm BioNTech and U.S. pharmaceutical giant Pfizer has shown potential and was found to be well tolerated in early-stage human trials.

Sterling traded at $1.2477 <GBP=D4>, flat in early Thursday trade but having gained 1.1% so far this week. The Australian dollar fetched $0.6919 <AUD=D4>, having gained 0.7% on the week.

The euro changed hands at $1.1252, maintaining its gain of 0.3% since the start of week.

The U.S. manufacturing activity rebounded more than expected in June, with the manufacturing activity index by the Institute for Supply Management (ISM) hitting its highest in 14 months as firms and businesses resumed operations.

Similar surveys from China, Germany and France all pointed to a recovery in factory activity while the ADP National Employment Report showed June private payrolls increased 2.369 million jobs.

Data for May was revised upward to show payrolls surging 3.065 million, instead of tumbling 2.76 million as previously estimated.

More closely watched jobs reports from the government, due later in the day ahead of U.S. public holiday on Friday, are expected to show an increase of 3 million non-farm payrolls in June.

There are concerns about whether the U.S. economy can sustain its recovery as coronavirus infections surge in many parts of the United States.

California dramatically rolled back efforts to reopen its economy on Wednesday, banning indoor restaurant dining in much of the state, closing bars and stepping up enforcement of social distancing and other measures as COVID-19 infections surge.

Against the yen, the dollar traded at 107.45 yen, having fallen 0.4% the previous day as it was unable to recover losses made in Asian trade on safe-haven bids.

"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.

(Reporting by Hideyuki Sano; Editing by Sam Holmes)

© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / CANADIAN DOLLAR (AUD/CAD) 0.00% 0.97978 Delayed Quote.0.52%
AUSTRALIAN DOLLAR / JAPANESE YEN (AUD/JPY) -0.05% 79.983 Delayed Quote.1.68%
AUSTRALIAN DOLLAR / NEW ZEALAND DOLLAR (AUD/NZD) 0.23% 1.07984 Delayed Quote.0.63%
AUSTRALIAN DOLLAR / SWISS FRANC (AUD/CHF) 0.02% 0.68603 Delayed Quote.1.45%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.00% 0.7702 Delayed Quote.1.06%
BIONTECH SE -4.02% 101.59 Delayed Quote.24.62%
BRITISH POUND / AUSTRALIAN DOLLAR (GBP/AUD) 0.22% 1.76354 Delayed Quote.-0.90%
BRITISH POUND / JAPANESE YEN (GBP/JPY) -0.68% 141.118 Delayed Quote.0.68%
CANADIAN DOLLAR / JAPANESE YEN (CAD/JPY) -0.05% 81.53 Delayed Quote.1.22%
EURO / AUSTRALIAN DOLLAR (EUR/AUD) 0.29% 1.5671 Delayed Quote.-1.51%
EURO / JAPANESE YEN (EUR/JPY) -0.57% 125.446 Delayed Quote.0.12%
JAPANESE YEN / SWISS FRANC (JPY/CHF) 0.07% 0.8581 Delayed Quote.-0.33%
NEW ZEALAND DOLLAR / JAPANESE YEN (NZD/JPY) -1.16% 74.07 Delayed Quote.1.10%
PFIZER INC. -0.14% 36.7 Delayed Quote.-0.30%
PFIZER LIMITED -0.86% 5113.8 End-of-day quote.0.12%
US DOLLAR / JAPANESE YEN (USD/JPY) -0.07% 103.8 Delayed Quote.0.62%
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