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Dollar Down, U.S. Election and COVID-19 Worries Cap Gains

Forex Oct 29, 2020 10:49PM ET
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© Reuters.

By Gina Lee

Investing.com – The dollar was down on Friday morning in Asia, and the euro hovered near a four-week low against the dollar over hints from the European Central Bank (ECB) that it could roll out further monetary easing by the end of the year.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged down 0.15% to 93.838 by 10:39 PM ET (2:39 AM GMT), after climbing to a near four-week high during the previous session over the euro’s decline.

The USD/JPY pair edged down 0.15% to 104.45. A rebound in U.S. treasury yields and broad dollar buying saw the greenback rally from a five-week trough overnight.

The AUD/USD pair was up 0.33% to 0.7051 and the NZD/USD pair inched up 0.05% to 0.6634.

The USD/CNY pair was down 0.34% to 6.6914.

The GBP/USD pair inched up 0.07% to 1.2936. The U.K. and the European Union (EU) continue to work towards reaching a post-Brexit trade agreement by the end of the year.

The ECB announced its monetary policy on Thursday, keeping interest rates steady but committing to craft a response to the second wave of COVID-19 cases in the region by its December meeting and conforming to investor expectations.

“We agreed, all of us, that it was necessary to take action and therefore to recalibrate our instruments at our next Governing Council meeting,” ECB President Christine Lagarde said.

“The economy in the euro zone is deteriorating at a faster pace than expected, and some view that monetary easing won’t be enough to lift the euro zone, or that it will be too late [in December]. Such reactions probably pressured the euro to fall,” Mizuho Securities chief currency strategist Masafumi Yamamoto told Reuters, adding that the euro is unlikely to rise in the immediate future.

An advance estimate of U.S. third-quarter GDP released on Thursday showed a 33.1% rise quarter-on-quarter, the fastest pace since records began in 1947. Separate data showed that 751,000 Americans filed for unemployment claims in the week ended Oct. 24, against the 791,000 claims from the previous week.

Although the dollar was on track to post its second monthly gains, uncertainty over the Nov. 3 U.S. presidential elections and worries over the mounting number of COVID-19 cases capped gains.

The number of global cases rose by 479,000, according to the World Health Organization, and France and Germany begin government-mandated lockdowns on Friday and Monday respectively. The U.S. also reported rising cases in 41 of the country’s 50 states.

Investors now await data due to be released later in the day, including the EU’s third quarter GDP and October inflation, while across the Atlantic, the U.S. is due to release September data on personal consumption and expenditures, as well as the Chicago Purchasing Managers Index (PMI).

Dollar Down, U.S. Election and COVID-19 Worries Cap Gains
 

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