By Peter Nurse
Investing.com - The dollar was largely unchanged in early European trade Thursday, holding onto recent gains as new lockdowns in Europe to combat the surge in Covid-19 cases prompted demand for safe havens.
At 2:55 AM ET (0655 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was flat at 93.403, having gained around 0.5% so far this week.
Concerns of further damage to the economic recovery have grown as French President Emmanuel Macron and German Chancellor Angela Merkel returned their countries back into lockdown on Wednesday, after recording new record levels of cases in the second wave of the Covid-19 virus.
EUR/USD was up 0.1% at 1.1746, after sliding to a one-week low of $1.1718 overnight, on speculation that the European Central Bank may move up additional stimulus - which many expect for December's meeting - to today's meeting.
“The case for even more ECB easing has strengthened further lately, but we still expect the central bank to wait until December with further easing,” said analysts at Nordea, in a research note.
“What the ECB could do next week is to explicitly commit to a faster pace of purchases, or at the very least give clear signals that more easing will likely be in store in December. The latter step is more likely than the former, and should be enough to avoid a disappointment in financial markets,” the bank added.
It's also a heavy day for U.S. data, with the weekly report on jobless claims in focus. Third-quarter GDP will provide for more dramatic headlines, but the data has essentially been overtaken by the events of the last few weeks already.
Elsewhere, USD/JPY was largely flat at 104.28, after the dollar dropped to its lowest level in more than a month against the safe-haven yen on Wednesday.
The Bank of Japan kept its key interest rates and asset purchases unchanged earlier Thursday, as widely expected. However, the central bank cut its growth forecast for the year ending in March to a 5.5% contraction from a 4.7% drop, citing a delayed recovery in the services sector.
GBP/USD rose 0.2% to 1.3002, showing some strength as European Union and U.K. negotiators continue discussions over the trading arrangements between the two blocs, raising hopes that a Brexit deal could be reached by early November.