Dollar up on fears of new pandemic wave, unemployment claims

FILE PHOTO: U.S. dollar notes are seen in this November 7, 2016 picture illustration. Picture taken November 7. REUTERS/Dado Ruvic/Illustration

NEW YORK (Reuters) - The U.S. dollar strengthened on Thursday as concerns about a rise in new coronavirus cases globally and higher-than-expected U.S. unemployment claims drove demand for the safe-haven currency.

An index tracking the dollar against a basket of currencies was up 0.38% to 97.437. The dollar has strengthened in recent weeks as investors grappled with fears about the coronavirus pandemic’s impact on economic growth.

The Japanese yen strengthened against the euro by 0.35% but was roughly flat against the dollar after earlier in the day hitting its highest since June 12.

The number of Americans filing for unemployment benefits fell last week, but the pace of decline appears to have stalled amid a second wave of layoffs as companies battle weak demand and fractured supply chains, supporting views that the economy faces a long and difficult recovery from the COVID-19 recession.

“The greenback’s move higher came on fresh safe-haven buying following a much better Philly Fed index bounce, though a significantly higher than expected jobless claims print, and on increasing concerns over the spread of coronavirus both in the U.S. and other regions around the world,” wrote analysts at Action Economics.

More than 8.36 million people have been reported to be infected by the novel coronavirus globally and 447,985 have died, a Reuters tally found.

A surge in new infections in several U.S. states and the imposition of travel curbs in Beijing to stop a new outbreak there have served as a reminder of the risks of reopening economic activity before a vaccine has been developed.

The euro was last 0.36% weaker against the greenback, at $1.120. The common currency has lost nearly 1% of its value in less than a week as investors questioned whether the European Union would be able to pass an ambitious stimulus plan proposed by the European Commission, given that some countries are opposed to handing out aid as grants.

Reporting by Kate Duguid in New York and Olga Cotaga in London; editing by Jonathan Oatis and Alistair Bell