- Dollar rises to one-week high
- Delta variant adds uncertainty to global recovery
- U.S. consumer confidence rises
- Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
(Adds new comment, updates prices, changes byline, dateline; previous LONDON)
The U.S. dollar rose on Tuesday to a one-week peak, on track for its largest single daily gain in about two weeks, as new coronavirus outbreaks threatened to derail a global economic recovery with the Australian dollar and the British pound leading losses.
A decline in risk appetite benefits the dollar as a safe haven.
Fears over the spread of the highly infectious Delta variant of the virus are denting sentiment at a time markets are on edge after the Federal Reserve shocked traders with a hawkish tilt earlier this month.
Indonesia is grappling with record-high cases, while Malaysia is set to extend a lockdown and Thailand has announced new restrictions. Spain and Portugal are imposing travel restrictions on unvaccinated British travellers.
"There is an extra layer of uncertainty in the global recovery with economies like South Africa, Australia, and parts of Asia with their lockdown restrictions because of the Delta variant," said Simon Harvey, senior FX market analyst at Monex Europe in London.
"We went from a certain and stable background in Q2 to a lot more uncertainty going forward and markets have to price that," he added.
In late morning trading in New York, the dollar index =USD , a gauge of its value against six major rivals, rose 0.6% to 92.124, on course for its biggest percentage gain since mid-June.
The greenback's correlation with general risk appetite as seen from the global daily case loads of COVID-19 has weakened in recent weeks as market attention has been more focused on when the Fed will exit its massive policy stimulus. But that correlation has started to strengthen since last week.
The dollar also got a boost after data showed U.S. consumer confidence increased in June to its highest level since the COVID-19 pandemic started more than a year ago. That boosted expectations for strong economic growth in the second quarter.
The euro EUR=EBS declined 0.3% to $1.1892, edging back toward the 2-1/2-month low of $1.1847 touched on June 18.
"The market had been positioned long of the single currency on optimism regarding the vaccine catch-up trade in the region (but) forecasts that the Delta variant of COVID could spread through Europe (in) the summer months could now be undermining confidence in this trade," Rabobank strategist Jane Foley wrote in a report, cutting a one-month euro forecast to $1.19 from $1.20.
Elsewhere, sterling GBP=D3 slipped back toward a two-month low, weakening 0.4% to $1.3825.
The Australian dollar AUD=D3 , seen as a liquid proxy for risk appetite, fell 0.6% to US$0.7520 amid concerns over renewed COVID-19 lockdowns across parts of the country.
======================================================== Currency bid prices at 10:42AM (1442 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index =USD 92.0800 91.8670 +0.24% 2.333% +92.1940 +91.8520 Euro/Dollar EUR=EBS $1.1896 $1.1923 -0.22% -2.63% +$1.1930 +$1.1878 Dollar/Yen JPY=EBS 110.4850 110.6200 -0.12% +6.93% +110.7550 +110.4350 Euro/Yen EURJPY= 131.43 131.90 -0.36% +3.55% +131.9400 +131.2900 Dollar/Swiss CHF=EBS 0.9215 0.9200 +0.17% +4.16% +0.9233 +0.9190 Sterling/Dollar GBP=D3 $1.3824 $1.3880 -0.34% +1.25% +$1.3882 +$1.3814 Dollar/Canadian CAD=D3 1.2379 1.2342 +0.30% -2.79% +1.2396 +1.2333 Aussie/Dollar AUD=D3 $0.7517 $0.7565 -0.62% -2.27% +$0.7570 +$0.7508 Euro/Swiss EURCHF= 1.0961 1.0964 -0.03% +1.43% +1.0972 +1.0956 Euro/Sterling EURGBP= 0.8604 0.8590 +0.16% -3.74% +0.8608 +0.8588 NZ NZD=D3 $0.6988 $0.7042 -0.73% -2.65% +$0.7051 +$0.6980 Dollar/DollarDollar/Norway NOK=D3 8.5645 8.5320 +0.36% -0.28% +8.5810 +8.5190 Euro/Norway EURNOK= 10.1891 10.1730 +0.16% -2.66% +10.2137 +10.1560 Dollar/Sweden SEK= 8.5406 8.5088 +0.07% +4.20% +8.5522 +8.5101 Euro/Sweden EURSEK= 10.1607 10.1536 +0.07% +0.84% +10.1707 +10.1417 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates https://tmsnrt.rs/2RBWI5EGlobal COVID cases https://tmsnrt.rs/3vYpy3H
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
