US Markets

Dollar rises as investors eye virus restrictions, political uncertainties

Credit: REUTERS/Gary Cameron

The dollar was gaining ground on Tuesday as investors sought safety for the second day in a row while they eyed new restrictions aimed at curbing surging coronavirus cases in Europe, the latest U.S.-China tensions and Washington's lack of progress on reaching a fiscal stimulus agreement.

By Sinéad Carew

NEW YORK, Sept 22 (Reuters) - The dollar was gaining ground on Tuesday as investors sought safety for the second day in a row while they eyed new restrictions aimed at curbing surging coronavirus cases in Europe, the latest U.S.-China tensions and Washington's lack of progress on reaching a fiscal stimulus agreement.

Sterling wavered between losses and gains, at one point slipping to two-month lows against the dollar, as British Prime Minister Boris Johnson unveiled new restrictions to tackle a second wave of the virus.

"Those types of moves give the market pause. As we all know the virus doesn't live in a vacuum and what you see in one country or region will affect other places. Economically it could have an effect," said Minh Trang, senior FX trader at Silicon Valley Bank.

"Typically when there's some fear in the market and some unknowns, investors would flow toward the dollar as a temporary safe haven."

Trang also noted that the dollar, which has been weak since July, seemed to be hitting a floor with its slide, taking a pause in reaction to news from central banks as well as the virus.

In remarks released late Monday ahead of his testimony to a congressional committee on Tuesday, U.S. Federal Reserve Chair Jerome Powell said the Fed remained committed to using all the tools at its disposal to help the U.S. economy recover from the coronavirus pandemic.

A research report from Action Economics on Tuesday also cited issues such as deteriorating relations with China as well as deadlock in Washington over an aid package aimed at bolstering the economy.

U.S. President Donald Trump was set to tell the United Nations General Assembly it "must hold China accountable for their actions" related to the coronavirus pandemic, according to excerpts from a speech he was to deliver on Tuesday.

The S&P pared its opening gains, though it was still in positive territory by late morning as it bounced back slightly from Monday's sell-off. Also on Monday currency investors shunned risk and pushed the dollar index to its highest point in almost six weeks.

The dollar =USD was last up 0.23% at 93.783 versus a basket of currencies.

In Spain, the army has been asked to help fight a coronavirus surge in Madrid, while restrictions in other European countries were announced last week, with Germany describing the situation as "worrying."

You-Na Park-Heger, FX analyst at Commerzbank said that even though Commerzbank does not expect more extensive lockdowns, the possibility may weigh on market sentiment for some time.

"A rapid correction of yesterday's move is therefore unlikely to be seen any time soon," she said.

The Australian dollar, after earlier falling to its lowest point against the greenback in almost a month, was last down 0.21% at 0.7208 per dollar AUD=D3 after the Reserve Bank of Australia said it is assessing policy options including currency market intervention and negative rates.

The euro was down 0.31% against the dollar at $1.1733 EUR=EBS, while the dollar was gaining on the yen for the second day in a row, up 0.11% at 104.760 JPY=EBS.

Sterling was down 0.36% at $1.2768, though above its session low of $1.2711.

========================================================

Currency bid prices at 10:21AM (1421 GMT)

Description

RIC

Last

U.S. Close Previous Session

Pct Change

YTD Pct Change

High Bid

Low Bid

Euro/Dollar

EUR=

$1.1733

$1.1769

-0.31%

+4.67%

+1.1773

+1.1721

Dollar/Yen

JPY=

104.7600

104.6400

+0.11%

-3.77%

+104.8400

+104.4100

Euro/Yen

EURJPY=

122.92

123.17

-0.20%

+0.80%

+123.2700

+122.6600

Dollar/Swiss

CHF=

0.9173

0.9143

+0.33%

-5.22%

+0.9175

+0.9138

Sterling/Dollar

GBP=

1.2768

1.2814

-0.36%

-3.70%

+1.2866

+1.2715

Dollar/Canadian

CAD=

1.3293

1.3306

-0.10%

+2.36%

+1.3345

+1.3283

Australian/Dollar

AUD=

0.7208

0.7223

-0.21%

+2.66%

+0.7235

+0.7179

Euro/Swiss

EURCHF=

1.0763

1.0762

+0.01%

-0.82%

+1.0771

+1.0746

Euro/Sterling

EURGBP=

0.9188

0.9183

+0.05%

+8.68%

+0.9220

+0.9145

NZ Dollar/Dollar

NZD=

0.6658

0.6666

-0.12%

-1.16%

+0.6687

+0.6640

Dollar/Norway

NOK=

9.3050

9.2791

+0.28%

+6.00%

+9.3677

+9.2725

Euro/Norway

EURNOK=

10.9170

10.9300

-0.12%

+10.97%

+10.9880

+10.9135

Dollar/Sweden

SEK=

8.8754

8.8414

+0.00%

-5.05%

+8.8963

+8.8403

Euro/Sweden

EURSEK=

10.4133

10.4134

+0.00%

-0.52%

+10.4290

+10.3845

(Additional reporting by Gertrude Chavez-Dreyfuss in New York and Elizabeth Howcroft in London, editing by Larry King, Catherine Evans and Jonathan Oatis)

((sinead.carew@thomsonreuters.com; +1 (646) 223 6186; Reuters Messaging: sinead.carew.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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