FOREX-U.S. dollar rises as surge in coronavirus cases boosts haven bid

The safe-haven dollar rose on Friday, as investors grew cautious about a resurgence in 
U.S. coronavirus cases that has cast doubts on expectations about a V-shaped recovery for
the world's largest economy.
Currencies that thrive with higher risk appetite such as the euro, sterling, as well as
commodity-linked currencies like the Australian, New Zealand, and Canadian dollars struggled 
against the greenback.

Cases rose across the United States by at least 39,818 on Thursday, the largest one-day 
increase of the pandemic, with Texas becoming the new hot spot for the novel coronavirus. 
More than 36,000 new U.S cases were recorded on Wednesday, a few hundred shy of the record 
36,426 on April 24.
"There's an inverse correlation between the risk sentiment and the dollar," said Erik Bregar, 
head of FX strategy, at Exchange Bank of Canada. "Whenever we get headlines that hurt risk 
sentiment, that helps the dollar." 
In midmorning trading, the dollar rose 0.2% against a basket of currencies to 97.571.
The dollar showed little reaction after the data showed U.S. consumer spending, which accounts
for more than two-thirds of U.S. economic activity, jumped 8.2% last month. That was the largest
increase since the government started tracking the series in 1959.
That said, personal income fell 4.2% last month. 
"On balance, today’s mixed numbers validate the view that the economy has weathered the worst of 
the coronavirus but underscore what’s expected to be a choppy road to recovery," said Joe Manimbo
, senior market analyst at Western Union Business Solutions in Washington. 

The euro, meanwhile, reversed gains against the dollar to trade 0.1% lower at $1.1202.
Traders said there were $2 billion in option expiries in the currency pair that went off at 
earlier in the session at the $1.12 strike.
That said, the euro was on track to end the week on a positive note.
Bank of America Merrill Lynch's trading platforms and broader positioning surveys indicate currency
markets are long euro/dollar, though positioning is not stretched. In other currencies, the 
commodity-tied units fell, with the Australian dollar down 0.6% at US$0.6885. 
The U.S. dollar gained 0.6% at C$1.3712. 
    

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