FOREX-Dollar starts week on back foot ahead of data, earnings

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Hideyuki Sano
TOKYO, July 13 (Reuters) - The U.S. dollar started the week
with a soft tone on Monday as investors looked to looming
economic data from around the world and U.S. corporate earnings
to gauge whether the markets' guarded optimism on the economic
outlook is justified.
The greenback ended its third week of losses on Friday as
investors bought into risk-sensitive currencies on bets that the
worst of the pandemic's sweeping impact was over.
The dollar index against a basket of currencies stood at
96.586 =USD , down slightly after having lost about 0.5% last
week.
U.S. coronavirus cases continued to surge over the weekend,
as Florida reported an increase of more than 15,000 new cases of
COVID-19 in 24 hours, a record for any state, surpassing a peak
hit in New York in April. "Rising coronavirus cases are not positive but at the
moment, markets seem to think that there is still some distance
to a situation where an overflow of the medical system will
force them to put restrictions on the economy," said Yukio
Ishizuki, senior currency strategist at Daiwa Securities.
Hopes for development of drugs and vaccines for the disease
are also supporting risk sentiment as do economic indicators
that have so far shown a recovery from lockdowns.
"We've seen a rapid rebound after a rapid decline in various
economic data. But looking ahead, the improvement could slow or
we could even seen a deterioration given the second infections,"
said Masafumi Yamamoto, chief currency strategist at Mizuho
Securities.
A weekly gauge of consumer confidence in Australia has
dropped after a spike in infections in Melbourne and that could
be repeated in the U.S., where the magnitude of the outbreak is
much larger, he noted.
U.S. consumer inflation figures for June are due on Tuesday
while retail sales, a key gauge of consumption, are released on
Thursday.
U.S. corporate earning season will start this week,
providing another window to assess the scale of the damage as
well as the recovery, from the pandemic.
Investors also looked to China, where economic recovery is
gaining momentum as the outbreak has largely been contained.
China will release its June trade data on Tuesday and a
batch of other data, including second quarter GDP, on Thursday.
The Chinese yuan stood flat at 7.0068 per dollar CNH= in
early trade.
The euro traded at $1.1314 EUR= , maintaining its slow
uptrend since late last month.
Looming large for the common currency was a planned EU
summit on July 17-18, where leaders need to seek to bridge gaps
on long-term budget and economic stimulus plans.
European Council President Charles Michel proposed a smaller
joint EU budget for 2021-27 than previously envisaged to placate
thrifty countries in the north. The dollar traded at 106.915 yen JPY= , off two-week lows
of 106.635 set on Friday.