U.S. dollar gains on rising COVID-19 cases, lockdown risk in Europe
The safe-haven dollar rose on Wednesday, pushing the euro to one-week lows on prospects of a national lockdown in Germany and France as coronavirus cases surged, with implied volatility gauges in the common currency and the yen hitting multi-month highs as traders positioned for next Tuesday’s U.S. election.
Germany and France were preparing to announce restrictions approaching the level of last spring’s blanket lockdowns on Wednesday as COVID-19 deaths across Europe rose almost 40% in a week, while financial markets tumbled on fears of the likely economic costs.
Democratic presidential candidate Joe Biden leads Republican President Donald Trump nationally by 10 percentage points, according to a Reuters/Ipsos poll.
The UBS strategist said a Biden administration is seen de-escalating trade tensions with traditional allies such as Europe and Canada, as well as China, which should improve market sentiment overall and weigh on the dollar as a safe haven.
In midmorning trading, the euro was down 0.5% against the dollar at $1.1736, after sliding to a one-week low.
The dollar though slipped 0.1% against the yen to 104.33 yen. Earlier, the greenback dropped to a more than one-month low.
One-week implied volatility gauges in euro and yen rose to their highest in nearly seven months.
The dollar index, which tracks the greenback against a basket of six currencies, was up 0.3% at 93.45.
Elsewhere, the British pound fell 0.7% versus the dollar to $1.2958.
10-year Treasury yield falls for 4th straight day amid fears of a worsening pandemic
U.S. Treasury yields ebbed lower on Wednesday as investors remained on edge about the spikes in new coronavirus cases.
The yield on the benchmark 10-year Treasury note fell to 0.756%, the lowest level since Oct. 16. It also marked the fourth straight day of decline for the 10-year rate. The yield on the 30-year Treasury bond slipped to 1.542%. Yields move inversely to prices.
The 10-year yield broke above 0.80% earlier this month, for the first time since June.
Reference: CNBC
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