FOREX-Dollar edges up; Aussie and Kiwi gain slightly on U.S. and China data

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* U.S. markets are closed for a public holiday today

LONDON, July 3 (Reuters) - The dollar edged up in early
London trading on Friday and currency traders' risk appetite was
boosted only slightly by better-than-expected jobs data in the
United States, as surging coronavirus cases continued to taper
market optimism.
U.S. payrolls surged on Thursday but the reaction in
currencies was limited. Even after two months of job recovery
from May, the U.S. economy has recovered just over a third of an
historic plunge of 20.787 million jobs lost in April.
Broader market sentiment improved in the U.S. session after
the jobs data and overnight as Asian shares rallied to a
four-month high following a brisk pickup in Chinese service
sector activity. Against a basket of currencies, the dollar rose slightly in
early London trading, up less than 0.1% at 97.306 at 0740 GMT
=USD . It is on track for its biggest weekly fall since the
first week of June.
"In a week characterized by dropping FX volatility, the
dollar looks to be re-establishing a gentle bear-trend as
equities keep showing complacency to grim contagion news," wrote
ING strategists in a note to clients.
"Such complacency still indicates the short-term outlook for
risk assets is not lacking hurdles, but there is still a
material chance we have seen the peak in the dollar," they
added.
Riskier currencies edged up, with the New Zealand dollar up
0.3% at 0.652 versus the U.S. dollar NZD=D3 and the Australian
dollar up 0.1% at 0.69305 AUD=D3 .
The euro was down slightly against the dollar, at 1.1226
EUR=EBS . It gained against the safe Swiss franc EURCHF=EBS
and fell versus the commodity-driven Norwegian crown
EURNOK=D3 .
Traders have been balancing hopes for an economic recovery
with surging coronavirus infections, particularly in the U.S.,
which has seen record-high spikes in cases.
U.S. states have delayed and in some cases reversed plans to
let stores reopen and activities resume. "Even if the US job market surprised on the upside
yesterday, that does not mean that it has recovered further, as
the number of new infections has continued to rise recently,
causing some US states to suspend their easing measures.
Moreover, there are enough other trouble spots globally," Antje
Praefcke, FX analyst at Commerzbank, wrote in a note to clients.
"As a result for the market the chances have risen that risk
aversion will rise again over the coming days due to the
negative news flow, allowing the dollar to appreciate, rather
than optimism making further ground," she said.
"The downside in EUR-USD still seems to be the weaker side
currently," she added.
Relations between the United States and China are also in
focus over China's strategy in Hong Kong.
The U.S. Senate unanimously approved legislation on Thursday
to penalise banks doing business with Chinese officials who help
implement Beijing's new national security law for Hong
Kong. With U.S. markets closed for a public holiday on Friday, and
no significant data releases, analysts expect a quiet day.