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US dollar up on worries over rising Covid-19 cases
THE US dollar strengthened on Thursday as broad optimism about Covid-19 vaccines ran into worries about rising infection numbers and risks to the fragile global economic recovery.
The US dollar was also caught between two opposing forces, with a safety bid supporting it, while fresh speculation over monetary easing to boost the economy held it back somewhat.
Euro/US dollar shed 0.2 per cent to last trade at US$1.1833.
With fiscal stimulus plans falling by the wayside as US President Donald Trump's refusal to concede electoral defeat consumes lawmakers' attention, speculation is growing that the Federal Reserve may further loosen monetary policy in December.
Two top Fed officials on Wednesday held out the option of doing more, and Treasuries have rallied in anticipation of a possible expansion of Fed bond buying.
An index which tracks the US dollar against a basket of currencies was flat at 92.55, though close to the weakest it has been since August.
Still, the Scandinavian currencies and the Australian dollar - beneficiaries of the US dollar's recent decline - lost strength.
The Norwegian krone fell 0.3 per cent against both the US dollar and the euro at 9.0535 and 10.7165 respectively. The Swedish krona was down by the same extent against both, while the Aussie dollar fell 0.4 per cent at 0.7278.
"It seems that market participants are confused. They don't know where to place more emphasis, on the positive vaccine headlines or on the acceleration of the infections from the pandemic," said Charalambos Pissouros, senior market analyst at JFD Group.
He said he was sticking to his guns, however, "that any declines in risk-linked assets are likely to stay limited".
"We would treat them as corrective moves within the broader uptrend, which we expect to eventually resume," said Mr Pissouros.
Safe-haven Japanese yen fell 0.2 per cent against the greenback to 103.96, having gained 1.6 per cent in the week since Pfizer announced promising trial results on its Covid-19 vaccine.
Elsewhere, sterling dipped 0.4 per cent to US$1.3210 and 0.2 per cent at 89.53 pence against the euro after The Times newspaper reported that European leaders will urge the European Commission to publish no-deal Brexit plans as the year-end deadline approaches. REUTERS