By Gina Lee
Investing.com – The dollar was down on Thursday morning in Asia, with fears over fresh lockdowns implemented in Europe to curb the incessantly rising number of COVID-19 cases and the prospects for the region’s further economic recovery.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.07% to 93.418 by 9:59 PM ET (1:59 AM GMT), reversing earlier gains.
The USD/JPY pair edged up 0.18% to 104.47, after the dollar dropped to its lowest level in more than a month against the safe-haven yen on Wednesday. The Bank of Japan will announce its monetary policy later in the day and is widely expected to avoid changes to the current monetary settings.
The AUD/USD pair gained 0.31% to 0.7066 and across the Tasman Sea, the NZD/USD pair was up 0.21% to 0.6650.
The USD/CNY pair edged down 0.15% to 6.7180. China is due to release details of its economic plans for the next five years later in the day. The Chinese Communist Party will also release a 15-year plan as it concludes four days of closed-door negotiations later in the day.
The GBP/USD pair edged up 0.11% to 1.2995.
Both French President Emmanuel Macron and German Chancellor Angela Merkel ordered fresh lockdowns in their respective countries on Wednesday to curb the second wave of COVID-19 cases hitting the region. However, worries grew about the measures’ impact on an already fragile economic recovery.
The euro was at a one-week low against the dollar overnight, when it also saw its weakest levels against the yen since July. Although the European Central Bank (ECB) is not expected to introduce new stimulus measures after its meeting later in the day, some investors were expectant that a path towards action in December is currently being paved.
“The euro can fall further if [ECB President] Christine Lagarde lays the groundwork for further policy easing at her post meeting press conference,” Commonwealth Bank of Australia (OTC:CMWAY) currency analyst Kim Mundy said in a note.
Another event on investors’ minds is the U.S. presidential election, with the Nov. 3 date less than a week away as the country also faces an uptick in COVID-19 numbers.
Democrat candidate Joe Biden is comfortably ahead of incumbent president Donald Trump in the polls, with investors cautiously betting on a Democrat victory in both the White House and both chambers of Congress.
However, some investors warned that it was too early to tell.
“While Biden is taking the lead, Trump has been catching up in some parts of swing states … there is certainly a possibility of a higher volatility in the market if it becomes a closer battle, involving risks such as full results not being released [on election day,” Barclays (LON:BARC) senior strategist Shinichiro Kadota told Reuters.
On the data side, the U.S. will release its third-quarter gross domestic product later in the day.