The safe-haven US dollar edged higher in choppy trading on Friday, moving within narrow ranges, as investors grew cautious about a resurgence in US COVID-19 cases that has fueled doubts on expectations of a V-shaped recovery for the world’s largest economy.
Currencies that thrive with higher risk appetite, such as sterling and those linked to commodities like the Australian, New Zealand and Canadian dollars, struggled against the greenback.
Florida and Texas are leading the surge in new US coronavirus cases. Both states on Friday ordered bars to once again close down and imposed tighter restrictions on restaurants in a setback to efforts to open up their economies during the pandemic.
“At the end of the day, it’s very clear that we are in a deep economic hole. COVID-19 won’t be easy to break away from,” said Juan Perez, currency trader at Tempus Inc in Washington.
In Taipei on Wednesday, the New Taiwan dollar fell against the greenback, losing NT$0.005 to close at the day’s high of NT$29.640, little changed from Friday last week’s NT$29.660. Local markets were closed on Thursday and Friday for the Dragon Boat Festival holiday.
On Friday, the US dollar rose slightly against a basket of currencies at 97.50, down 0.1 percent for the week.
The US dollar reacted little to data showing that US consumer spending, which accounts for more than two-thirds of US economic activity, jumped 8.2 percent last month, the largest increase since the US government started tracking the series in 1959.
That said, personal income fell 4.2 percent.
“On balance, today’s mixed numbers validate the view that the economy has weathered the worst of the coronavirus, but underscore what’s expected to be a choppy road to recovery,” said Joe Manimbo, senior market analyst at Western Union Business Solutions LLC in Washington.
The euro edged higher against the US dollar in seesaw trading to US$1.1221.
Traders said there were US$2 billion in option expiries in the currency pair that went off earlier in the session at the US$1.12 strike.
On the week, the euro posted weekly gains of 0.4 percent against the US dollar.
Bank of America Merrill Lynch’s trading platforms and broader positioning surveys indicate currency markets are long euro/dollar, though positioning is not stretched.
The US dollar was little changed against the yen at 107.17 yen, up 0.3 percent for the week.
In other currencies, the commodity-tied units fell as risk appetite weakened, with the Australian dollar down 0.3 percent against the US dollar at US$0.6864.
Additional reporting by CNA, with staff writer
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