The greenback rose against its peers on Wednesday except versus safe-haven Japanese yen as prospects of a national lockdown in France and Germany due to surge in coronavirus infections triggered risk-aversion together with selloff in U.S. equities with Dow falling more than 900 points for its worst drop since June and investors remained cautious ahead of the U.S. Presidential election next Tuesday. (Dow ended at 26,520, down 943 points or -3.43%)
Versus the Japanese yen, dollar met renewed selling at 104.55 head of Asian open and dropped to 104.17 at European open, then to a 5-week low at 104.12 ahead of New York open on risk-averse buying of jpy. The pair then rebounded to 104.45 at New York open before retreating again to 104.22.
The single currency fell to 1.1770 in Australia on overnight news of a potential lockdown in Germany. Intra-day decline accelerated in Europe on safe-having buying of usd together with a selloff in European equities and the pair fell to an 8-day low at 1.1718 at New York open before rebounding in tandem with cable to 1.1760 and then moved sideways.
Reuters reported German Chancellor Angela Merkel wants a meeting with state leaders on Wednesday to agree to close all restaurants and bars from Nov. 4 in a bid to curb coronavirus infections but keep schools and nurseries open, newspaper Bild reported.
The British pound retreated to 1.3020 in Asia before gaining to 1.3063 ahead of European open. However, the pair met renewed selling there and tumbled in European session on usd's broad-based strength together with cross-selling of sterling especially versus euro to a 1-week low at 1.2917 at New York open. However, cable then pared intra-day losses and rebounded strongly to 1.3016 (Reuters) on news that a Brexit deal may be reached but weakened again to 1.2974 and then traded narrowly.
Bloomberg reported European Union and U.K. negotiators made progress this week toward resolving some of the biggest disagreements that have long bedeviled the Brexit talks, raising hopes that a deal could be reached by early November, according to people familiar with the discussions.
In other news, Reuters reported German Chancellor Merkel said on Wednesday after talks with regional leaders to agree on a partial lockdown that the coronavirus situation was very serious and the speed of its spread was extremely high. "We have to act, and we have to act now - to avoid a national health emergency," said Merkel.
Data to be released on Thursday:
Japan retail sales, Bank of Japan interest rate decision, consumer confidence, New Zealand NBNZ business outlook NBNZ own activity, Australia export prices, import prices, Germany unemployment change, unemployment rate, CPI, HICP, Italy business confidence, consumer confidence, EU business climate, economic sentiment, industrial sentiment, services sentiment, consumer confidence, ECB refinancing rate decision, ECB deposit rate decision, U.S. GDP, GDP deflator, core PCE price index, PCE price index, initial jobless claims, continued jobless claims, pending home sales, and Canada average weekly earnings, building permits.
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