The U.S. dollar struggled against more sensitive currencies on Thursday due to positive U.S. and European economic data. However, worries about the pandemic halted more aggressive risk-taking ahead of upcoming U.S. jobs figures.
The greenback lowered marginally against a basket of currencies, tracking toward its worst week in a month, with a 0.4% fall. But it could shift in either direction depending on U.S. jobs data.
Analysts expect that nonfarm payrolls figures will show an increase of 3 million jobs for last month. However, estimates vary widely, and the data comes with growing concerns about whether the U.S. economy can sustain its recovery as coronavirus infections rise rapidly. Some states already reimposed limits on business and personal activity.
Vishnu Varathan, the head of economics at Mizuho Bank in Singapore, stated that any reasonable reaction to this number must also price in the resurgence in cases. According to him, a strong beat is needed to boost sentiment.
Nonetheless, there was good news too. German biotech firm, BioNTech, developed a COVID-19 vaccine, and U.S. pharmaceutical giant, Pfizer, showed potential in early-stage human trials.
Furthermore, U.S. manufacturing activity recovered more than expected in June, with the Institute for Supply Management’s manufacturing activity index skyrocketing to its highest in 14 months.
Surveys from China, France, and Germany pointed to an improvement in factory activity as well. According to the ADP National Employment Report, June’s private payrolls added nearly 2.4 million jobs.
What about other currencies?
The Japanese yen was steady at 107.53 yen per dollar on Thursday, pointing to elevated investor caution.
The New Zealand dollar gained modestly in Asia, climbing up by 0.2% to a one-week high of $0.6492.
Meanwhile, the euro traded at $1.1257, maintaining its gain of 0.3% since the start of the week. And the sterling rose above $1.25 for the first time in a week. It last sat at $1.2483, jumping by almost 2% from a one-month low hit on Monday.