NEW YORK (Reuters) - The safe-haven dollar edged higher in choppy trading on Friday, moving within narrow ranges, as investors grew cautious about a resurgence in U.S. coronavirus cases that has fueled doubts on expectations of a V-shaped recovery for the world’s largest economy.
Currencies that thrive with higher risk appetite, such as sterling and those linked to commodities like the Australian, New Zealand and Canadian dollars, struggled against the greenback.
The U.S. Centers for Disease Control and Prevention (CDC) on Friday reported 2,414,870 U.S. cases of coronavirus, an increase of 40,588 from its previous count, and said deaths had risen by 2,516 to 124,325.
Florida and Texas are leading the surge in new U.S. cases. Both states on Friday ordered bars to once again close down and imposed tighter restrictions on restaurants in a setback to efforts to open up their economies during the pandemic.
“At the end of the day, it’s very clear that we are in a deep economic hole. COVID-19 won’t be easy to break away from,” said Juan Perez, currency trader at Tempus Inc in Washington, referring to the respiratory illness caused by the novel coronavirus.
In afternoon trading, the dollar was slightly higher against a basket of currencies 97.426 .
The dollar reacted little to data showing U.S. consumer spending, which accounts for more than two-thirds of U.S. economic activity, jumped 8.2% last month, 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, edged higher against the dollar in see-saw trading to $1.1225 . Traders said there were $2 billion in option expiries in the currency pair that went off earlier in the session at the $1.12 strike.
On the week, the euro posted weekly gains of 0.4% against the dollar.
Bank of America Merrill Lynch’s trading platforms and broader positioning surveys indicate currency markets are long euro/dollar, though positioning is not stretched.
The dollar was little changed against the yen at 107.17 yen.
In other currencies, the commodity-tied units fell as risk appetite weakened, with the Australian dollar down 0.3% against the U.S. dollar at US$0.6864 . The U.S. dollar gained 0.1% at C$1.3653 .
Reporting by Gertrude Chavez-Dreyfuss; Editing by Jonathan Oatis and Will Dunham