* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* U.S. markets are closed for a public holiday today
(Updates prices, adds comment and chart)
By Elizabeth Howcroft
LONDON, July 3 (Reuters) - The dollar edged up 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 regained just over a third of an
historic plunge of 20.787 million jobs lost in April.
Broader market sentiment improved as Asian shares rallied to
a four-month high overnight following a brisk pickup in Chinese
service sector activity. Against a basket of currencies, the dollar rose less than
0.1%, to 97.289 at 0948 GMT =USD . It is still 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," FX
strategists at ING wrote 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
0.1% at 0.6519 versus the U.S. dollar NZD=D3 and the
Australian dollar up 0.1% at 0.6932 AUD=D3 .
The Norwegian crown rose around 0.2% versus the dollar, at
9.552, on track for its best week since the first week of June
NOK=D3 .
The euro was down slightly against the dollar, at 1.12295
EUR=EBS . It gained against the safe-haven 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 United
States, where infections are rising in the majority of states.
"We are surprised about an emerging consensus that a
much-faster-than-expected recovery justifies support for risk
assets. What we see in the latest data is just base effects, as
economies exit the lockdown," Bank of America FX strategists
Michalis Rousakis and Rohit Garg said in note.
"We would expect global output to stabilize soon to well
below pre-crisis levels. This is not a V," they added.
U.S. states have delayed and in some cases reversed plans to
let stores reopen and activities resume. "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," wrote Antje Praefcke, FX analyst at Commerzbank.
"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.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Dollar https://tmsnrt.rs/2VELLnN
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>