U.S. Dollar Remains Steady. What About Other Currencies?
The U.S. dollar was steady against a basket of major currencies on Thursday. Despite the surging Covid-19 cases in Europe increased fears across markets that new lockdowns would further hit the already fragile economic recovery. The safe-haven dollar traded against a basket of six currencies at 93.41, pausing its ascent after gaining 0.3% in early trade.
On Wednesday, German Chancellor Angela Merkel and French President Emmanuel Macron ordered their countries back into lockdown as a massive second wave of infection cases threatened to overwhelm Europe. After that, traders’ worries of further damage to the economic rebound grew.
On Thursday, the euro traded at $1.1753 after dropping to a one-week low of $1.1718 overnight. The common currency also steadied versus the Japanese yen, last buying 122.63 yen after plunging to its weakest levels since July overnight.
Investors expect the European Central Bank meeting on Thursday to resist pressure to unveil new stimulus measures. However, it will probably pave the way for action in December.
Commonwealth Bank of Australia currency analyst Kim Mundy noted that the euro could lower further if ECB President Christine Lagarde lays the groundwork for more policy easing at her post-meeting press conference.
The upcoming days may be more volatile on the FX market
Traders also prepared for more volatility on the markets with the U.S election less than a week away. The country also faces a rise in coronavirus infections like Europe.
Former Vice President Joe Biden, is still leading in the polls over President Donald Trump. As a result, investors are cautiously betting on his victory and speak about the possibility of a “blue wave” outcome.
Shinichiro Kadota, the senior strategist at Barclays, stated that Trump has been catching up in some parts of swing states, while Biden is taking the lead. According to him, there is a possibility of higher volatility in the FX market if it becomes a closer battle.
Some data is due on Thursday, including the U.S. third-quarter gross domestic product. Analysts expect it to show record growth but not enough to make up for the Covid-19 impact.
Meanwhile, the greenback steadied versus the Japanese yen at 104.33 yen, after tumbling to a more than one-month low on Wednesday.
The Aussie dollar drifted away from its almost one-week low of $0.7038 marked overnight. The currency last traded at $0.7063. The New Zealand dollar climbed up against the U.S. dollar, last trading higher by 0.27% to 0.6652.
On the other hand, the Canadian dollar was steady, trading at 1.3308 against the greenback on Thursday, after it plunged to a three-week low overnight.
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