Dollar up on COVID-19 case rise, gains curbed by Fed easing expectations

Thursday,   19-Nov-2020   03:50 PM (IST)

The dollar strengthened on Thursday as broad optimism about COVID-19 vaccines ran into worries about rising infection numbers and risks to the fragile global economic recovery. The dollar was also caught between two opposing forces, with a safety bid supporting it while fresh speculation over monetary easing to boost the economy held it back somewhat. With fiscal stimulus plans falling by the wayside as President Donald Trump’s refusal to concede electoral defeat consumes lawmakers’ attention, speculation is growing that the Federal Reserve may further loosen monetary policy in December. Two top Fed officials on Wednesday held out the option of doing more, and Treasuries have rallied in anticipation of a possible expansion of Fed bond buying. An index which tracks the dollar against a basket of currencies was flat at 92.55 though close to the weakest it has been since August. Still, the Scandinavian currencies and the Australian dollar - beneficiaries of the dollar’s recent decline - lost strength. The Norwegian crown fell 0.3% both against the U.S. dollar and the euro at 9.0535 and 10.7165 respectively. The Swedish crown was down by the same extent against both, while the Aussie dollar fell 0.4% at 0.7278. Safe-haven Japanese yen fell 0.2% against the greenback to 103.96, having gained 1.6% in the week since Pfizer announced promising trial results on its COVID-19 vaccine. U.S. jobs figures will be closely watched on Thursday as a key factor ahead of the Fed’s next moves, and at 1000 GMT European Central Bank President Christine Lagarde appears at a European Parliament Committee hearing in Frankfurt. Elsewhere, sterling dipped 0.4% to $1.3210 and 0.2% at 89.53 pence against the euro after The Times newspaper reported that European leaders will urge the European Commission to publish no-deal Brexit plans as the year-end deadline approaches.