Dollar shines, euro suffers as COVID fears flare over Europe

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TOKYO, Nov 22 (Reuters) – The safe-haven U.S. greenback traded near a 16-month excessive to the euro on Monday on rising anxiousness over the impression of surging COVID-19 infections in Europe, with Austria reimposing a full lockdown and Germany contemplating following swimsuit.

The dollar was close to its strongest since early October in opposition to the riskier Australian and Canadian {dollars}, with the commodity-linked currencies additionally pressured by a droop in crude oil. learn extra

The greenback received further assist from bullish feedback by Federal Reserve officers Richard Clarida and Christopher Waller on Friday who advised a sooner tempo of stimulus tapering could also be applicable amid a quickening restoration and heated inflation. learn extra

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An extra fast finish to tapering raises the potential of earlier interest-rate will increase too. Currently the market is priced for the Federal Open Market Committee (FOMC) to start out climbing charges by the center of subsequent 12 months.

The greenback index , which gauges the forex in opposition to six main friends, traded at 96.065, staying nearby of final week’s 16-month excessive of 96.266.

The euro slumped 0.23% to $1.1274, approaching its lowest since July of final 12 months at $1.1250, reached Friday, when it tumbled 0.66%.

“EURUSD has been in free-fall and will likely get the lion’s share of attention from clients looking for a play on growing restrictions and tensions across Europe,” Chris Weston, head of analysis at brokerage Pepperstone in Melbourne, wrote in a be aware to purchasers.

“For momentum, trend followers and tactical traders, short EUR remains attractive here.”

Europe has once more develop into the epicentre of the pandemic, accounting for half of world circumstances and deaths. learn extra

A fourth wave of infections has plunged Germany, Europe’s largest financial system, right into a nationwide emergency, Health Minister Jens Spahn stated, warning that vaccinations alone won’t minimize case numbers.

Austria turns into the primary nation in western Europe to reimpose a full COVID-19 lockdown from Monday.

Worries {that a} slowdown in Europe might hit vitality demand dented crude oil, which was additionally in retreat over the prospect of a U.S.-led launch of emergency stockpiles.

The greenback added 0.21% in opposition to the oil-linked Canadian loonie to C$1.26575, closing in on Friday’s excessive at C$1.2663, the strongest stage since Oct. 1.

The Aussie eased barely to $0.7234, and earlier dipped as low as $0.72285, the cusp of a low since Oct. 6.

“We expect AUD to remain heavy in the near‑term (and) a dip to $0.70 is possible,” with a slowing Chinese financial system and the Reserve Bank of Australia’s dovish coverage stance dragging on the forex, Joseph Capurso, a strategist at Commonwealth Bank of Australia, wrote in a report.

Meanwhile, “USD can extend its recent rally this week and set a fresh 2021 high,” he stated. “Another round of strong U.S. inflation can further propel market pricing of FOMC rate hikes and the USD.”

The greenback was largely flat in opposition to fellow safe-haven the yen , altering palms at 114.03 yen per greenback, in the course of its vary over the previous week and a half.

In crypto, bitcoin traded round $58,100, consolidating after its retreat from an all-time excessive at $69,000, marked earlier this month.

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Reporting by Kevin Buckland
Editing by Shri Navaratnam

Rolled Euro banknotes are placed on U.S. Dollar banknotes in this illustration taken May 26, 2020. REUTERS/Dado Ruvic/Illustration

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