Dollar starts week on back foot ahead of data, earnings

RATE DOLLAR - TOKYO. The U.S. dollar edged down in Asian trade on Monday as investors looked to looming economic data from around the world and U.S. corporate earnings to gauge whether the markets' guarded optimism on the economic outlook is justified.

The greenback had ended its third week of losses on Friday as investors bought into risk-sensitive currencies on bets that the worst of the pandemic's sweeping impact was over.

The dollar index against a basket of major currencies slipped 0.2% in early Monday trade to 96.452.

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U.S. coronavirus cases surged over the weekend, as Florida reported an increase of more than 15,000 new cases in 24 hours, a record for any state, surpassing a peak hit in New York in April.

"Rising coronavirus cases are not positive but at the moment, markets seem to think that there is still some distance to a situation where an overflow of the medical system will force them to put restrictions on the economy," said Yukio Ishizuki, senior currency strategist at Daiwa Securities.

Hopes for development of drugs and vaccines for the disease are also supporting risk sentiment as do economic indicators that have so far shown a recovery from lockdowns.

"We've seen a rapid rebound after a rapid decline in various economic data. But looking ahead, the improvement could slow or we could even seen a deterioration given the second round of infections," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

A weekly gauge of consumer confidence in Australia has dropped after a spike in infections in Melbourne and that could be echoed in the United States, where the magnitude of the outbreak is much larger, he noted.