FOREX-Rise in COVID-19 cases spurs risk-off move, dollar lifted

* Dollar rises modestly amidst broader risk-off move
* Euro dips, but remains near four-month high ahead of EU
conference
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

(New throughout)
By Kate Duguid
NEW YORK, July 16 (Reuters) - The safe-haven U.S. dollar
rose modestly on Thursday afternoon as worries about rising
numbers of coronavirus infections spurred a broader risk-off
move, pushing U.S. equities lower.
Another jump in coronavirus infections has forced California
and other states to shut down again, raising fears the U.S.
economy and labor market will continue to suffer.
Retail sales in June increased for the second consecutive
month, according to a report from the Commerce Department. But
the resurgence in new COVID-19 cases is chipping at the budding
recovery, keeping 32 million Americans on unemployment benefits,
according to a separate report from the Labor Department on
Thursday. The U.S. dollar index =USD , which measures the currency
against a basket of six rivals, was last up 0.35% at 96.350.
The three major U.S. stock indexes were all in the red on
the day, with the S&P 500 index .SPX last down 0.42%.
"The data in general was pretty constructive on U.S. retail
sales. I think however that for foreign exchange, things haven't
really changed," said Mazen Issa, senior foreign exchange
strategist at TD Securities.
That is, he explained, because since the bottom in the stock
market on March 23, foreign exchange markets have been highly
correlated with equities.
"The data in and of itself hasn't been a focal point for
currency markets, it has really been about risk asset
performance. And that has been motivated by the notion that as
poor as the data may be in future months, that you have a fiscal
and monetary backstop. There is a lot of faith being placed in
central banks and the collapse in forex volatility has been
reflective of that."
The euro was slightly softer in afternoon trade, last
trading down 0.28% at $1.138 EUR= ahead of an EU summit
beginning Friday, at which European countries are expected to
vote on a 750 billion euro ($856 billion) recovery fund to
revive growth in the bloc. Even if the financing package the EU agrees on is smaller
than what is currently on the negotiating table, analysts said
the dollar may nevertheless continue to weaken against the euro.
"While (Europe has) had their troubles, they're in a much
better position to rebound than the United States. And I don't
mean equity markets, I mean the real economy. And that's another
reason it's justified that the dollar is weakening overall,"
said John Doyle, vice president of dealing and trading at Tempus
Inc.