NEW YORK (Reuters) – The dollar slipped on Wednesday in choppy trading, with the market having a modest appetite for risk-taking amid generally upbeat U.S. data and improving European economic numbers.
The greenback fell against currencies that perform well in times of times of risk appetite such as the Australian, New Zealand, and Canadian dollars, as well as sterling.
However, moves in the currency market have little conviction, as doubts mounted about a much-anticipated global economic recovery given the resurgence of U.S. cases of COVID-19, the illness caused by the novel coronavirus, and the threat of renewed lockdowns in U.S. states deemed hot spots.
“There’s definitely a risk-on tone to the market, which continues to bet on the fact that we’re past the worst point of COVID. But I think the jury is still out on that judgment,” said Boris Schlossberg, managing director at BK Asset Management in New York.
“There’s a significant risk of reclosing some of the states. There’s still a lot of risk-off flows, and the dollar could be the beneficiary of those flows,” he added.
The dollar reacted little to the ADP National Employment Report, which showed private payrolls increased by 2.369 million jobs last month. Data for May was revised upward to show payrolls surging 3.065 million, in line with a surprise rebound in job growth reported by the government, instead of tumbling 2.76 million as previously estimated.
The dollar did lose ground as a safe haven, after U.S. manufacturing data showed a reading that suggested an expansion for the month of June.
In Europe, IHS Markit’s final euro zone Manufacturing Purchasing Managers’ Index (PMI) moved closer to the 50 mark separating growth from contraction in June with transmission rates of the coronavirus falling in much of Europe and economies opening.
Germany’s manufacturing sector also contracted at a slower pace as Europe’s largest economy lifted restrictions.
In midmorning trading, the dollar was down 0.3% against a basket of currencies =USD at 97.145.
Although the dollar has acted as a haven currency for much of the coronavirus crisis, U.S. fundamentals have played a bigger role recently, meaning it can appreciate on better-than-expected data.
Against the yen, the dollar fell 0.5% to 107.42 yen JPY=EBS. Analysts said the yen’s rise was safe haven-related given the declining stock markets, especially in Asia.
The euro, meanwhile, rose 0.3% to $1.1258 EUR=EBS, after a rally in which the euro gained 6% against the dollar in May and early June.
The Australian AUD=D3 and New Zealand dollars NZD=D3 both rose against the greenback.
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