© Reuters. By Peter Nurse
Investing.com – The dollar edged higher in early European trade Thursday, helped by its safe haven status as concerns about the impact of the coronavirus remain.
At 3:05 AM ET (0805 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.2% at 92.517, but just above the month’s low of 92.129. dropped 0.1% to 1.1842, rose 0.1% to 103.89, while the risk sensitive fell 0.3% to 0.7286.
Traders are having to balance the two competing forces impacting the dollar, a safety bid supporting it and the idea of additional monetary easing to support the coronavirus-hit economy, which weighs on the greenback.
The number of Covid-19 deaths in the United States crossed 250,000 on Wednesday, according to data from Johns Hopkins University, with the number of people hospitalized with the virus rising above 78,000, the highest ever for a single day during the pandemic.
This has prompted further restrictions around the country, with New York City, for example, shutting schools from Thursday and switching to fully remote learning.
The likely impact of these new restrictions, coupled with the lack of progress on a fiscal stimulus bill, is fuelling speculation the Federal Reserve will have to expand its asset-buying campaign at a December policy meeting.
Meanwhile, the weekly unemployment numbers will be closely watched later Thursday for guidance on the Fed’s next moves.
That said, the euro isn’t in that great a spot either. Large parts of the euro-zone economy are shut down to combat the recent surge in Covid-19 cases, while EU leaders quibble about the ability to disperse the available funds to bolster the region.
Additionally, European Central Bank President Christine Lagarde appears at a European Parliament Committee hearing in Frankfurt later Thursday.
Elsewhere, dropped 0.4% to 1.3220 after The Times newspaper reported Europe’s leaders would demand the European Commission publish no-deal plans as the year-end deadline for a trade deal between the U.K. and the European Union neared.
While there is a growing expectation that the two sides will come to an agreement, “the technical time for ratification in the EU and UK is dangerously shrinking,” said ING analyst Francesco Pesole, in a research note.
dropped 0.2% to 7.6914, ahead of the latest meeting of the Turkish central bank.
Turkey’s new central bank governor, Naci Agbal, is expected to raise the key one-week repo rate by at least 450 basis points apparently with the blessing of President Recep Tayyip Erdogan. A disappointing outcome could send the lira reeling again. There will also be a central bank policy meeting in South Africa later.
Elsewhere overnight, the Indonesian central bank surprisingly cut its key rate to a record low.
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