By Peter Nurse
Investing.com - The dollar has drifted lower in early European trade Monday, as sentiment surrounding currency traders continues to fluctuate between optimism over a global economic recovery and worry as the number of coronavirus cases continues to grow.
At 3 AM ET (0700 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was down 0.2% at 97.170.
EUR/USD rose 0.4% to 1.1259, GBP/USD climbed 0.4% to 1.2378, while USD/JPY was down 0.1% at 107.11.
The World Health Organization reported almost 190,000 new cases for the 24-hour period through early Sunday, a new high. This means the total number of global Covid-19 cases has now topped the 10 million mark, with more than 500,000 deaths recorded globally.
America continues to be hard hit, accounting for over a quarter of all cases. A number of the more populous states, including California, Texas and Florida, have had to curtail the opening of a number of businesses, as cases nationwide soar to record levels.
“Renewed lockdowns stand to delay the U.S. recovery,” said analysts at ING, in a research note. “But we also know that Congress and the Fed have a light trigger-finger when it comes to fresh stimulus.”
Economic data released globally has tended to suggest a swift recovery. Profits at China's industrial firms rose for the first time in six months in May, while in the U.S. retail sales have bounced strongly and economists are forecasting there will be three million jobs added in June after a shock 2.5 million gain a month earlier. The offshore yuan strengthened 0.2% against the dollar in response.
Investors will now look to eurozone confidence data, at 05:00 AM ET (0900 GMT) for the latest gauge of the region's economic health, as well as to German and Spanish preliminary inflation numbers for June.
Additionally, German Chancellor Angela Merkel is set to host French President Emmanuel Macron for talks on Monday, with the two leaders likely to discuss what strategy to employ to get agreement on the recovery fund for the region.
Hopes for a united EU response to the virus and a swift regional recovery have helped the single currency post gains of around 1.5% against the greenback so far this month.
Elsewhere, the EU-U.K. free trade negotiations are scheduled to restart this week in Brussels, amid few signs of any progress.
“We expect little progress during the summer months, keeping the uncertainty about UK growth and trade outlook in place and in turn making GBP one of the G10 FX underperformers,” said ING.
Sterling hit a month-low on Friday, and has fallen by 0.7% over the last week against both the U.S. dollar and the single currency. U.K. consumer credit and mortgage lending data are due at 4:30 AM (8:30 GMT).