US dollar in tight range ahead of US services sector data

The US dollar holds steady at 107.56 yen today (July 6, 2020) in Asia following a 0.3 per cent gain last week. ― Reuters pic
The US dollar holds steady at 107.56 yen today (July 6, 2020) in Asia following a 0.3 per cent gain last week. ― Reuters pic

TOKYO, July 6 — The US dollar held steady against most currencies today as investors awaited data expected to show the US services sector stopped contracting, and highlighting the economic recovery from the coronavirus pandemic.

The euro moved in a narrow range before economic data from Germany and the eurozone that are also forecast to show a sharp rebound in corporate activity and retail sales, which would ease concerns about the economic outlook.

A steady rise of new coronavirus infections in the United States has discouraged some investors from taking on excessive risk, but most market participants remain focused on the growing likelihood that major economies will continue to recover.

“When it comes to dollar/yen, recovery expectations are supporting the dollar, but worries about the virus are capping the upside,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

“The markets are focused on other currency pairs, like the Australian dollar, which is still in a clear uptrend against the US dollar due to the rise in copper prices.”

The US dollar held steady at 107.56 yen today in Asia following a 0.3 per cent gain last week. Market activity was subdued following the July 4 long weekend holiday in the United States.

The euro changed hands at US$1.1247. Against the British pound, the common currency bought 90.18 pence .

Sterling moved in a narrow range at US$1.2474.

Against the Swiss franc, the US dollar was quoted at 0.9455.

The Institute for Supply Management's index for non-manufacturing activity due later today is expected to rise to 50.0 in June from 45.4 in the previous month, indicating activity stopped shrinking.

The greenback has been locked into narrow trading ranges recently as concerns about a resurgence in US coronavirus infections offset growing optimism about the economy.

The euro will come into focus later in the trading day as Germany, the euro zone's largest economy, is scheduled to release industrial orders for May.

Retail sales for all of the eurozone will also be released later today. Both indicators are forecast to recover strongly from large declines caused by the spread of the coronavirus.

Elsewhere in currencies, the Australian dollar traded at US$0.6944 today in Asia following a 1.2 per cent gain last week.

The Aussie is another market focus ahead of a Reserve Bank of Australia (RBA) policy meeting tomorrow. Analysts expect that rates will stay at 0.25 per cent amid signs that Australia's economic downturn will not be as dire as first feared.

Recent gains in prices of copper and other commodities that Australia exports, combined with a more positive tone for the RBA, are likely to support the Aussie, analysts say.

Across the Tasman Sea, the New Zealand dollar was quoted at US$0.6535. — Reuters

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