FOREX-Dollar holds gains as COVID-19 surge boosts safe-haven demand

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Eimi Yamamitsu
TOKYO, Oct 29 (Reuters) - The dollar held gains against a
basket of major currencies on Thursday as escalating coronavirus
cases in Europe stoked fears across markets that fresh lockdowns
would further hit the already fragile economic recovery.
The safe-haven greenback steadied against a basket of six
currencies =USD at 93.41, taking a pause after its 0.3% gains
in early trade.
Concerns of further damage to the economic recovery grew as
French President Emmanuel Macron and German Chancellor Angela
Merkel ordered their countries back into lockdown on Wednesday,
as a massive second wave of coronavirus cases threatened to
overwhelm Europe. The euro EUR=EBS changed hands at $1.1753 after sliding to
a one-week low of $1.1718 overnight. It also steadied against
the Japanese yen EURJPY= , last fetching 122.63 yen after
hitting its weakest levels since July overnight.
Amid surging cases across Europe, the European Central Bank
meeting on Thursday is expected to resist pressure to unveil new
stimulus measures, but will likely pave the way for action in
December. "EUR can fall further if ECB President Christine Lagarde
lays the ground work for further policy easing at her post
meeting press conference," said Commonwealth Bank of Australia
currency analyst Kim Mundy in a note.
Traders also braced for volatility with the U.S election
less than a week away, while the country, like Europe, also
faces an increase in coronavirus infections.
With former Vice President Joe Biden consistently leading in
the polls over President Donald Trump, traders cautiously bet on
his victory and a possible "blue wave" outcome, where Democrats
control both chambers of Congress.
"While Biden is taking the lead, Trump has been catching up
in some parts of swing states," said Shinichiro Kadota, senior
strategist at Barclays.
"There is certainly a possibility of a higher volatility in
the market if it becomes a closer battle, involving risks such
as full results not being released (on the election day)," he
said.
Data due on Thursday includes U.S. third-quarter gross
domestic product, which analysts expect to show record growth
but not enough to make up for the pandemic impact.
The greenback steadied against the Japanese yen at 104.33
yen JPY=EBS , having dropped to a more than one-month low on
Wednesday.
The Bank of Japan ends its two-day policy meeting later in
the day and analysts expect the central bank to keep monetary
settings unchanged.
The Australian dollar AUD=D3 drifted away from its near
one-week low of $0.7038 marked overnight. It last sat at
$0.7063.
Across the Tasman Sea, the New Zealand dollar NZD=D3 edged
higher against its U.S. counterpart, last up 0.27% to 0.6652.
Elsewhere, the Canadian dollar CAD=D3 held steady, last
trading at 1.3308 against the greenback, after it fell to a
three-week low overnight.
The Bank of Canada said on Wednesday it expects interest
rates to remain at current record lows until 2023 and reduced
its weekly bond-buying programme.