* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, Oct 16 (Reuters) - The dollar was headed for its
best week of the month on Friday, as surging coronavirus cases
and stalled progress toward U.S. stimulus had nervous investors
seeking safe assets.
As fresh curbs to combat COVID-19 were introduced in Europe
and Britain, the world's reserve currency surged to a two-week
high of 93.910 against a basket of currencies =USD . It held
just below that peak in Asian morning trade.
London enters a tighter COVID-19 lockdown from midnight,
which with a curfew in Paris leaves two of Europe's largest
cities living under state-imposed restrictions. The U.S. Midwest is also battling record surges in new cases
as temperatures get colder, prompting authorities to set up a
field hospital in the suburbs of Milwaukee, Wisconsin, in case
of an overflow of patients from hospital wards. "Markets fear a slowdown in activity as new virus cases
rise," ANZ bank analysts Susan Kilsby and David Croy said in a
note.
"The deterioration is evident everywhere across Europe,
which is a major blow to the recovery's momentum and reinforces
deflationary risks."
Risk sensitive currencies were hit hardest, with the
Australian dollar AUD= dropping almost 1% on Thursday to a
more than two week low of $0.7057. It has lost 2% for the week,
weighed also by a dovish central bank speech. AUD/
The kiwi NZD= fell by 1% on Thursday to $0.6577 and both
Antipodeans sat just above their troughs on Friday. The
Norwegian krone NOK= is nursing a 2.4% loss this week.
The euro EUR= fell 0.3% against the dollar overnight and
has lost about 1% for the week so far as worries gather. The
U.S. dollar has gained 0.8% against a basket of currencies so
far this week, its largest weekly rise since late September.
Dollar demand pushed even the safe-haven yen lower on
Thursday, though the Japanese currency is up 0.2% for the week.
The yen JPY= was last steady at 105.38 per dollar.
The lockdown worries driving the selloff come as hopes for
U.S. stimulus before the Nov. 3 election fade and as data shows
cracks emerging in the recovery.
Weekly U.S. jobless claims rose by more than expected and
hit a two-month high last week, increasing concerns the pandemic
is causing lasting damage to the labour market. Some 25 million
Americans are on jobless benefits. "The data is consistent with the idea that the spread of
COVID-19 and removal of fiscal stimulus have seen a stalling of
the economic recovery," said NAB FX strategist Rodrigo Catril.
Stimulus plans, meanwhile, are bogged down in a three-way
negotiation between the White House, Senate Republicans and
House Democrats.
President Donald Trump said on Thursday that he was willing
to raise his offer of $1.8 trillion for a COVID-19 relief deal,
but the idea was nixed by Republican Senate Majority Leader
Mitch McConnell. Sterling was also heavily sold overnight, dropping more than
0.8% to $1.2891 on concerns about the obstacles keeping the
European Union and Britain from reaching a Brexit trade deal.
Sterling GBP= was last at $1.2902.
The European Union has put the onus on Britain to compromise
on their new economic partnership or stand ready for trade
disruptions in less than 80 days. British Prime Minister Boris Johnson will respond and set
out his approach to the talks on Friday. Currency bid prices at 8:16AM (016 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.1705 $1.1707 -0.01% +4.42% +1.1711 +1.1702
Dollar/Yen JPY=D3 105.3750 105.4600 -0.10% -3.00% +105.4100 +105.3550
Euro/Yen EURJPY= 123.34 123.44 -0.08% +1.14% +123.4700 +123.2700
Dollar/Swiss CHF=EBS 0.9146 0.9143 +0.04% -5.48% +0.9148 +0.9146
Sterling/Dollar GBP=D3 1.2902 1.2899 +0.03% -2.71% +1.2908 +1.2897
Dollar/Canadian CAD=D3 1.3226 1.3226 +0.01% +1.82% +1.3231 +1.3214
Aussie/Dollar AUD=D3 0.7084 0.7095 -0.15% +0.96% +0.7097 +0.7082
NZ NZD=D3 0.6596 0.6597 +0.00% -1.96% +0.6603 +0.6597
Dollar/Dollar
All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX