Dollar rises versus risky currencies as coronavirus surges, US stimulus hope fades

LONDON: The dollar gained on Monday, as surging coronavirus cases in Europe and the United States and a lack of progress on a U.S. stimulus package made traders cautious.

US House Speaker Nancy Pelosi said on Sunday that she expected a White House response on Monday to the latest stimulus plan, but there is little evidence a deal is close.

The United States has recorded its highest number of new COVID-19 cases for two consecutive days. So has France. Spain announced a new state of emergency and Italy has ordered restaurants and bars to shut by 6 p.m.

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 a vaccine as early as next month failed to bolster sentiment.

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Stephen Innes, chief global market strategist at broker Axi, said hopes for a vaccine prevented markets crashing on Monday.

“Fortunately, there are several vaccines in the pipeline, or we could have been looking at a pretty significant market reset this morning with Covid-19 flash points flaring up in virtually every corner of the globe this weekend,” he said.

An index tracking the U.S. dollar against a basket of currencies was last up 0.2% at 92.95 =USD. Euro/dollar – the most traded currency pair and part of the index – fell 0.3% at 1.1831 EUR=EBS.

The dollar also rose 0.1% against the Japanese yen at 104.87 JPY=EBS.

The biggest losers among major currencies were the Norwegian crown and the Australian dollar, which last week enjoyed hefty returns as traders took on more risk.

The Aussie dollar was last down 0.3% at 0.7118 AUD=D3. The Nokkie was falling 0.9% at 9.3015 against the dollar NOK=D3 and by 0.7% at 11.0050 versus the euro EURNOK=D3, having hit earlier a three-week low of 11.0190.

Norway is also due to announce stricter measures this week to limit the spread of the coronavirus following increases in the number of cases.

Traders will be watching for the German Ifo business survey at 0800 GMT. Current conditions are expected to have improved, according to economists polled by Reuters.

Elsewhere, the British pound lost ground in early trading, falling 0.3% to $1.2995 GBP=D3 but was stable versus the euro at 91 pence EURGBP=D3.

The Chinese yuan was down 0.4% against the U.S. dollar at 6.6907 in the offshore market CNH=EBS as the Chinese government began discussions on its next five-year plan.

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