LONDON, Oct 16 ― The dollar paused today but remained on track for its biggest weekly gain in a month amid growing market caution over a global surge in coronavirus cases and fading prospects of a US stimulus package before the November 3 election.
Fresh curbs to combat Covid-19 have been introduced across Europe while the US Midwest is also battling record spikes in new cases as data shows the country's economic recovery is losing steam.
Investors will get a further indicator of the health of the US economy with retail sales data due later today. Relief plans remain bogged down in a three-way negotiation between the White House, Senate Republicans and House Democrats.
The dollar and Japanese yen are both on track for weekly gains on investor appetite for safe haven assets, of 0.7 per cent and 0.4 per cent respectively.
The greenback hugged a tight range in morning trading in Europe today, with the dollar index last down 0.1 per cent. The euro strengthened slightly, last up 0.1 per cent.
On a monthly basis, the dollar index is up 0.7 per cent, its biggest rise since end-September.
“The fight against corona is not a sprint but a marathon and that is becoming increasingly clear on the FX market too,” said Esther Reichelt, FX analyst at Commerzbank, in a note.
“The winners will be all those economies and their respective currencies that do best at overcoming the economic challenges posed by the pandemic...Until then, the FX market will be dominated by risk considerations.”
Sterling gained around a third of a percent as markets waited for British Prime Minister Boris Johnson to set out his response to the European Union's demand for more concessions in Brexit talks.
He had previously set October 15 as a deadline for a deal to be reached. Britain's Foreign Secretary Dominic Raab said today there was still a trade deal “to be done”. ― Reuters