News: FOREX-U.S. dollar gains as new virus outbreaks seen undermining global recovery

• U.S. dollar advances 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 comments, updates prices)

The U.S. dollar rose to a one-week peak on Tuesday, posting its largest single daily gain in roughly two weeks, as new coronavirus outbreaks threatened to derail a global economic recovery, with the Australian and New Zealand dollars leading losses.

A decline in risk appetite benefits the U.S. 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 travelers, even as some states in Australia tightened movement curbs.

"Generally it's about increasing concerns over the Delta variant and it's just hurting the market somewhat," said Amo Sahota, director at corporate FX advisory firm Klarity FX in San Francisco.

"The market got its head turned with the severity of the some of the lockdowns in places such as Australia," he added.

In afternoon trading in New York, the dollar index =USD , a gauge of its value against six major currencies, rose 0.2% to 92.077, posting its biggest daily percentage gain since around mid-June.

The greenback's correlation with general risk appetite as seen from the global daily caseloads 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.

"We went from a certain and stable background in Q2 to a lot more uncertainty going forward, and markets have to price that," said Simon Harvey, senior FX market analyst at Monex Europe in London.

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 lifted expectations for strong economic growth in the second quarter.

The euro EUR=EBS declined 0.2% to $1.1896, edging back toward the 2-1/2-month low touched on June 18. Investors are also looking to Friday's U.S. nonfarm payrolls, with a new jobs forecast of 690,000 in June compared with 559,000 in May, according to a Reuters poll of economists.

"Stepped-up dollar buying is a sign of investor confidence that America's June jobs report could be one of the year's strongest," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

Elsewhere, sterling GBP=D3 gained 0.2% to $1.3842. The Australian dollar AUD=D3 , seen as a liquid proxy for risk appetite, fell 0.7% to US$0.7510 amid concerns over renewed COVID-19 lockdowns across parts of the country.

The New Zealand dollar was also lower in sympathy, down 0.7% at US$0.6988 NZD=D3 .

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	Currency bid prices at 3:26PM (1926 GMT) 

 Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	   High Bid	Low Bid 
											  Previous				   Change					
											  Session											  
 Dollar index	  =USD	   92.0710		91.8670	 +0.24%		 2.323%		+92.1940	+91.8520 
 Euro/Dollar	   EUR=EBS	$1.1897		$1.1923	 -0.21%		 -2.62%		+$1.1930	+$1.1878 
 Dollar/Yen		JPY=EBS	110.5500	   110.6200	-0.06%		 +6.99%		+110.7550   +110.4350 
 Euro/Yen		  EURJPY=	131.52		 131.90	  -0.29%		 +3.62%		+131.9400   +131.2900 
 Dollar/Swiss	  CHF=EBS	0.9213		 0.9200	  +0.16%		 +4.15%		+0.9233	 +0.9190 
 Sterling/Dollar   GBP=D3	 $1.3844		$1.3880	 -0.26%		 +1.34%		+$1.3882	+$1.3814 
 Dollar/Canadian   CAD=D3	 1.2394		 1.2342	  +0.43%		 -2.66%		+1.2398	 +1.2333 
 Aussie/Dollar	 AUD=D3	 $0.7510		$0.7565	 -0.72%		 -2.37%		+$0.7570	+$0.7508 
 Euro/Swiss		EURCHF=	1.0958		 1.0964	  -0.05%		 +1.40%		+1.0972	 +1.0953 
 Euro/Sterling	 EURGBP=	0.8593		 0.8590	  +0.03%		 -3.85%		+0.8609	 +0.8588 
 NZ				NZD=D3	 $0.6990		$0.7042	 -0.75%		 -2.67%		+$0.7051	+$0.6980 
 Dollar/Dollar																					 

 Dollar/Norway	 NOK=D3	 8.5615		 8.5320	  +0.37%		 -0.27%		+8.5810	 +8.5190 
 Euro/Norway	   EURNOK=	10.1871		10.1730	 +0.14%		 -2.67%		+10.2137	+10.1560 
 Dollar/Sweden	 SEK=	   8.5293		 8.5088	  -0.05%		 +4.06%		+8.5522	 +8.5101 
 Euro/Sweden	   EURSEK=	10.1485		10.1536	 -0.05%		 +0.72%		+10.1707	+10.1386 
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World FX rates	https://tmsnrt.rs/2RBWI5E 

Global COVID cases https://tmsnrt.rs/3vYpy3H

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