Dollar rises on safe-haven buying, sterling tumbles on new coroanvirus restrictions

The greenback extended its gains from Monday and ended higher across the board on Tuesday due to continued active safe-haven usd buying together with hawkish comments from Chicago Fed President Evans. Cable tumbled to an 8-week low after UK Prime Minister Boris Johnson announced new restrictions to tackle spread of Covid-19.  
  
Reuters reported the U.S. economy risks a longer, slower recovery, if not another outright recession, if Congress fails to pass a fiscal package to support out-of-work Americans and state and local governments, Chicago Federal Reserve President Charles Evans said on Tuesday.      
"Fiscal support is just fundamental," Evans said at a virtual meeting of the London-based Official Monetary and Financial Institutions Forum. His own forecast for the U.S. unemployment rate to fall to 5.5% by the end of next year assumes not just a vaccine for the coronavirus but also a U.S. fiscal package of at least $500 billion or $1 trillion, and otherwise I think the recessionary dynamics are really going to kick in in a much bigger way," he said.  
  
Versus the Japanese yen, although dollar met renewed selling at 104.75 at Asian open and fell to 104.41 in Europe, price erased intra-day losses and later rallied to session highs at 105.07 in New York morning on usd's broad-based strength before retreating to 104.92 on profit-taking.  
  
The single currency met renewed selling at 1.1773 in Australia and fell to 1.1721 in European morning. Despite staging a strong rebound to 1.1767, the pair the tumbled to an 8-week low of 1.1693 in New York morning on usd's strength before trading sideways.  
  
The British pound went through a volatile session. Although cable moved sideways in Asia, price met renewed selling at 1.2824 and tumbled to a 1.2714 in European morning on negative comments from Bank of England Governor Andrew Bailey together with fears of potential second national lockdown. However, the pair then rallied to 1.2867 on cross-buying in sterling but only to drop again to a fresh 8-week low of 1.2711 in New York on usd's broad-based strength as well as Prime Minister Boris Johnson's announcement of new restrictions to prevent another round of full lockdown before rebounding to 1.2742 on short-covering.  
  
Reuters reported Bank of England Governor Andrew Bailey said on Tuesday that escalating COVID-19 cases in Britain reinforced the downside risks in its latest forecasts for the economy.     He told a British Chambers of Commerce audience that there were "hard yards" to come and that the BoE would do everything it could to support the economy.    The British Prime Minister Boris Johnson unveiled on Tuesday a new package of tougher measures to try to tackle increasing numbers of COVID-19 cases, saying the government would extend the use of masks and tighten the so-called "rule of six".   
  
In other news, Reuters reported America's economy has shown "marked improvement" since the coronavirus pandemic drove it into recession, but the path ahead remains uncertain and the U.S. central bank will do more if needed, Federal Reserve Chair Jerome Powell told a congressional panel on Tuesday.  
  
Data to be released on Wednesday :  
  
Australia manufacturing PMI, services PMI, retail sales, Japan Jibun Bank manufacturing PMI, total industry activity index, New Zealand RBNZ interest rate decision, Germany GfK consumer sentiment, Markit manufacturing PMI, Markit services PMI, France Markit manufacturing PMI, Markit services PMI, EU Markit manufacturing PMI, Markit services PMI, UK Markit manufacturing PMI, Markit services PMI, and U.S. MBA mortgage applications, monthly home price, Markit manufacturing PMI, Markit services PMI.