FOREX-U.S. dollar gains on rising COVID-19 cases, lockdown risk in Europe

* Germany, France to announce restrictions as COVID cases rise
* Implied volatility rises in yen, euro
* Yen rises to 1-month high vs dollar, 3-month high vs euro
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

(Adds new comment, FX table, updates prices, changes byline, dateline; previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, Oct 28 (Reuters) - The safe-haven dollar rose on Wednesday, pushing the euro to one-week
lows on prospects of a national lockdown in Germany and France as coronavirus cases surged, with implied
volatility gauges in the common currency and the yen hitting multi-month highs as traders positioned for
next Tuesday's U.S. election.
Germany and France were preparing to announce restrictions approaching the level of last spring's
blanket lockdowns on Wednesday as COVID-19 deaths across Europe rose almost 40% in a week, while financial
markets tumbled on fears of the likely economic costs. The European Commission proposed on Wednesday a series of new measures to fight the COVID-19 pandemic
in the European Union, saying the new spike in infections on the continent was "alarming". Vassili Serebriakov, FX strategist at UBS in New York, said rising COVID-19 cases in Europe and around
the world and the potential for renewed lockdowns have dented the market's appetite for risk.
With news that Pfizer Inc PFE.N has not yet been able to determine how well its late-phase COVID-19
vaccine protects against the disease adding to the cautious mood, riskier assets fell across markets.

At the same time, traders are bracing for volatility going into and after the U.S. election.
Democratic presidential candidate Joe Biden leads Republican President Donald Trump nationally by 10
percentage points, according to a Reuters/Ipsos poll. "We are seeing some position-trimming ahead of the election, with the market still short dollars,"
said UBS' Serebriakov.
"The expectation is for a Biden presidency and that is consistent with a weaker dollar story. But as
some of the polls have tightened the last couple of days, markets are just taking some risk off the table
given the uncertainty," he added.
The UBS strategist said a Biden administration is seen de-escalating trade tensions with traditional
allies such as Europe and Canada, as well as China, which should improve market sentiment overall and
weigh on the dollar as a safe haven.
In midmorning trading, the euro EUR=EBS was down 0.5% against the dollar at $1.1736, after sliding
to a one-week low.
The dollar though slipped 0.1% against the yen to 104.33 yen JPY=EBS . Earlier, the greenback dropped
to a more than one-month low.
The euro also fell 0.6% against yen to 122.44 yen EURJPY= , after earlier sinking to its weakest
since July.
One-week implied volatility gauges in euro and yen rose to their highest in nearly seven months.
EUR1WO=R JPY1WO=R
That suggests investors are preparing for sharp price moves, with the biggest focus on the United
States as it struggles to contain its coronavirus epidemic ahead of the pivotal election next Tuesday.
Legal battles between Republicans and Democrats over how to count votes have raised the risk that the
outcome of the election will be disputed. The dollar index =USD , which tracks the greenback against a basket of six currencies, was up 0.3% at
93.45.
Elsewhere, the British pound fell 0.7% versus the dollar to $1.2958 GBP=D3 .
========================================================
Currency bid prices at 9:58AM (1358 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.1735 $1.1796 -0.51% +4.68% +1.1799 +1.1718
Dollar/Yen JPY=D3 104.3250 104.4350 -0.09% -3.94% +104.5500 +104.1700
Euro/Yen EURJPY= 122.42 123.14 -0.58% +0.39% +123.1800 +122.1900
Dollar/Swiss CHF=EBS 0.9110 0.9088 +0.25% -5.84% +0.9127 +0.9086
Sterling/Dollar GBP=D3 1.2953 1.3047 -0.76% -2.38% +1.3063 +1.2918
Dollar/Canadian CAD=D3 1.3280 1.3187 +0.71% +2.23% +1.3295 +1.3180
Aussie/Dollar AUD=D3 0.7060 0.7129 -0.97% +0.62% +0.7157 +0.7050
Euro/Swiss EURCHF= 1.0690 1.0716 -0.24% -1.49% +1.0719 +1.0687
Euro/Sterling EURGBP= 0.9058 0.9041 +0.19% +7.13% +0.9076 +0.9015
NZ NZD=D3 0.6645 0.6708 -0.92% -1.23% +0.6719 +0.6638
Dollar/Dollar
Dollar/Norway NOK=D3 9.3475 9.1920 +1.70% +6.57% +9.3825 +9.2100
Euro/Norway EURNOK= 10.9700 10.8310 +1.28% +11.51% +10.9985 +10.8002
Dollar/Sweden SEK= 8.8295 8.7226 +0.70% -5.54% +8.8579 +8.7200
Euro/Sweden EURSEK= 10.3610 10.2887 +0.70% -1.03% +10.3827 +10.2700