* Dollar makes modest but broad gains after Trump positive
test
* Dollar index +0.2%, AUD -0.5%
* Analysts say campaign likely to face disruption
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, Oct 2 (Reuters) - The dollar jumped and the
safe-haven yen hit its highest level of the week on Friday after
U.S. President Donald Trump said he tested positive for COVID-19
and entered quarantine.
The news could cause a new wave of market volatility as
investors brace for the hotly-contested presidential election in
November.
The greenback rose about half a percent on the
risk-sensitive Australian and New Zealand dollars, while the yen
was up roughly 0.3% at 105.27 per dollar, its highest since
Monday.
The euro EUR= fell 0.3% to $1.1716.
The yen made even larger gains against other currencies,
amid a broad shift out of riskier assets and commodities.
Volumes in Asia were lightened by holidays in China. MKTS/GLOB
Trump said on Twitter that he and his wife Melania tested
positive for the coronavirus and would quarantine. Analysts said this could upend the campaign, but that the
medium-term implications for currencies were not immediately
clear.
"It has the potential to reduce Trump's campaigning
ability," said Sean Callow at Westpac.
"It's also hurts him as far as the whole narrative that it's
really not much to worry about - it puts the COVID crisis itself
back front and centre...But does it shift polls? I just don't
know."
The Australian dollar AUD=D3 was last at $0.7144 and the
kiwi NZD=D3 at $0.6629. Against a basket of six major
currencies =USD the dollar rose 0.2% to 93.899.
Investors had already been on edge on signs that a hoped-for
U.S. fiscal stimulus package was stalled in Washington, and
after a spate of data, including jobless claims and consumer
spending, suggested that the plodding U.S. economic recovery
could be losing steam.
"What this does say is that the risk of the virus picking up
is still quite real," said Bank of Singapore FX analyst Moh
Siong Sim. "The U.S. infection rate is not going down anymore.
This reminds people that the virus is still around."