Dollar gains in surge in COVID cases, U.S. stimulus worries

NEW YORK (Reuters) – The U.S. dollar advanced on Monday, rising for a second straight session, bolstered by safe haven bids amid surging coronavirus cases in Europe and the United States as well as a lack of progress on a U.S. stimulus package.

FILE PHOTO: U.S. dollars are counted out by a banker counting currency at a bank in Westminster, Colorado November 3, 2009. REUTERS/Rick Wilking

The United States, Russia and France set new daily records for new COVID-19 infections as a second wave swelled across parts of the Northern Hemisphere, forcing some countries to impose new curbs. Spain announced a new state of emergency and Italy has ordered restaurants and bars to shut by 6 p.m.

On the stimulus front, U.S. House Speaker Nancy Pelosi said on Sunday she expected a White House response on Monday to the latest relief plan, but there is little evidence a deal is close.

“With the S&P heading down, the market is getting nervous,” said Amo Sahota, executive director at currency advisory firm Klarity FX in San Francisco.

“The danger is obviously if the case counts continue to rise as they have and we have to start additional restrictions, or curfews, or lockdowns in North America, although we have been told repeatedly by the government that they don’t want to do that,” he added.

Media reports that the Oxford/AstraZeneca vaccine has proved successful in elderly people and that staff at a major British hospital were told to prepare for it as early as next month were not enough to bolster sentiment.

An index tracking the U.S. dollar against a basket of six major currencies was last up 0.3% at 93.052.

The euro, which has the largest percentage share of the dollar index, fell 0.4% to $1.1811. It slipped earlier after the German Ifo business climate index fell for the first time in six months in October.

The dollar also rose 0.1% against the Japanese yen to 104.87.

Speculators remain short the U.S. dollar, the latest data from the Commodity Futures Trading Commission showed, though the number of shorting contracts declined in the last couple of weeks. [IMM/FX]

Investors have also raised doubts about expectations of a Democratic sweep of the U.S. Congress.

“One of the permutations is a Democratic win, but no control of the Senate. Is it a complete blue sweep or is it something else?,” said Klarity’s Sahota. “If we don’t get a blue sweep, then the stimulus won’t be big enough.”

The U.S. dollar rose 0.5% against the Chinese yuan in the offshore market to 6.703, in a sign of caution as the Chinese government began discussions on its next five-year plan.

The Australian dollar was last down 0.1% at 0.7137, while the greenback rose 0.6% versus the Canadian dollar to C$1.3203.

The British pound also fell 0.1% against the dollar to $1.3023 .

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