4 minutes - Source: CNBC
U.S. one-hundred dollar banknotes are arranged for a photograph in Hong Kong on April 15, 2019.
Paul Yeung | Bloomberg | Getty Images
The U.S. dollar held steady on Monday as investors readied for this week’s U.S. presidential election, while a surge in global coronavirus cases continued to weigh on sentiment.
The greenback held onto its gains after posting its largest weekly percentage rise since late September in the previous trading session.
Investors are sticking to the safe-harbour currency as Tuesday’s presidential election keeps financial markets on edge.
Democratic challenger Joe Biden leads in national opinion polls though the race is seen as close in enough battleground states that President Donald Trump could achieve the 270 votes needed to win in the state-by-state Electoral College that determines the overall victor.
“Currency volatility can extend well beyond Election Day because there is a high risk the losing candidate will dispute the election results. The 2000 election took around one month to resolve the disputes,” analysts at Commonwealth Bank of Australia said in a client note.
The dollar index, which tracks the greenback against a basket of major currencies, last sat at 94.058, near its four-week high.
Meanwhile, the novel coronavirus continues to ravage already-battered economies. Europe’s new COVID-19 cases have doubled in five weeks, a Reuters tally showed, with total infections surpassing 10 million.
The euro steadied in early Asian trade but was close to hitting long-term lows against the greenback and Japanese yen.
It last fetched $1.1647, a fraction away from a four-week low of $1.1640 marked last week, while against the yen, the common currency changed hands at 121.90.
“The euro has been selling since infection cases and lockdowns stood out in Europe,” said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.
“But infection cases in other countries, like the U.S., have been on a rise as well. As time goes on, I think increasing coronavirus cases and lockdowns will be common topics in any country, to the extent that they are no longer themes for the currency market,” he said.
With more than 20,000 new coronavirus cases a day in Britain, Prime Minister Boris Johnson on Saturday announced a lockdown across England that will last until Dec. 2. A senior cabinet member said on Sunday the lockdown could be extended.
Sterling traders also continue to eye updates on Brexit trade talks. EU and British Brexit negotiators will continue talks in Brussels on Monday until around mid-week, people on both sides told Reuters, in a sign of continued efforts to avoid a breakdown in trade when their deal deadline ends in less than nine weeks.
Against the dollar, the pound was last down 0.2% to $1.2928.
The greenback was little changed against the yen at 104.67 yen, away from a five-week trough of 104.02 hit on Thursday.
Elsewhere, the risk-sensitive Australian dollar was at $0.7014, after slipping around 0.4% to $0.7000, its lowest since July.
Besides the U.S. presidential election, this week is filled with economic data, including PMI data from China, U.S. and elsewhere, as well as U.S. non-farm payrolls and Chinese trade.
Three central banks are also due to announce policy decisions this week. The Reserve Bank of Australia meets on Tuesday, while the Bank of England and U.S. Federal Reserve deliver their decisions on Thursday.
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