FOREX-Dollar drifts as risk sentiment proves elusive

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Dollar, euro mostly unchanged
* Risk appetite wanes as virus cases grow again
* No major indicator to set a trend

By Julien Ponthus
LONDON, July 8 (Reuters) - The dollar edged lower against
its rivals on Wednesday as investors weighed hopes for a swift
economic recovery against fears about a resurgence in the
pandemic, particularly in the United States.
Demand for the U.S. currency proved remarkably stable as oil
prices steadied while European bourses traded in negative
territory.
Against a basket of its rivals, the dollar =USD index
slipped 0.14% at 96.84 .
The euro EUR=EBS rose marginally against the greenback at
$1.1289 while a recent fall in selling positions against the
greenback provided room for possible further drops.
Noting the absence of major economic indicators during the
session to set a trend, Marshall Gittler, head of investment
research at BDSwiss, argued the dollar "is generally at the
mercy of risk sentiment -- which seems to be taking a turn for
the worse".
The dollar is typically seen as a safe haven for investors
to park their cash each time a resurgence of the pandemic seems
to threaten a global economic recovery.
"I think in the absence of any news pro-growth news, the
virus count will be the one statistic that pops out from
everyone's screens", he added, noting that while it may seem
counter-intuitive, rising U.S. cases often encourage investors
to buy in the currency.
Commerzbank analysts also said that the current standstill
for the dollar reflected the lack of visibility for global
growth rather than a new-found serenity on world markets.
"What might look lethargic at first glance is likely to be
based on uncertainty as to what will happen to the economy,"
Commerzbank foreign exchange analysts told clients in a note.
"There are strong fears that the continued spread of the
virus might quickly stifle this recovery again, which in turn
would strengthen the U.S. dollar due to its – admittedly
questionable – status as a safe haven," they said.
Sterling GBP=D3 shrugged earlier losses and rose 0.2% at
at $1.2561 EURGBP=D3 as talks resumed between the Britain and
the European Union on terms for their future trade relations.
A Commission official said on Wednesday that future access
for UK banks, clearing houses and trading platforms was
currently being assessed to take into account how far the United
Kingdom will diverge from the bloc's rules.
Overall the pound held close to three-week high as traders
awaited an announcement on Wednesday by British finance minister
Rishi Sunak of his next moves to prevent a wave of job cuts from
damaging an already weakened economy. The Norwegian krone was up about 0.2% at 10.6848 against the
euro after data showed the economy rebounded in May after two
months of steep declines as a gradual reopening of businesses
from coronavirus lockdowns helped turn activity around.
Earlier, the onshore yuan CNY=CFXS was stable at 7.0129,
halting a two-day rally, after the Chinese central bank's daily
midpoint for the currency was set at a weaker than expected
level.
Other Asian currencies straddled narrow ranges as a
resurgence of coronavirus cases threatened a return of lockdown
restrictions, leaving investors fretting about the mounting
economic costs of the pandemic.
The Australian dollar AUD=D3 was flat at $0.6944 as
sentiment for the Aussie stayed weak after coronavirus lockdown
measures were reimposed in Australia's second biggest city of
Melbourne on Tuesday.