Sliding dollar steadies as virus worries persist

(Reuters) – The dollar nursed losses on Thursday following five sessions of declines as investors’ longer-term optimism about COVID-19 vaccines ran in to worries about rising infections and risks to the fragile global economic recovery.

Small gains against most majors lifted the greenback from Wednesday’s eight-session low against a basket of currencies, but it remains near the month’s trough of 92.129.

Surging coronavirus cases in the United States have exerted opposing forces on the dollar, with a safety bid supporting the currency while fresh speculation of monetary easing to boost the economy has undermined it.

Concern has also driven the safe-haven yen about 0.8% higher this week, recouping roughly three-quarters of the steep loss it suffered last week, when Pfizer announced its COVID-19 vaccine.

The yen was steady at 103.80 per dollar and not far below its recent eight-month high of 103.18. The risk-sensitive Australian and New Zealand dollars each eased about 0.2%. [AUD/]

The euro has had pandemic problems of its own as lockdowns spread across the continent. It softened marginally to $1.1846.

“Immediate risks posed by the surge in infections to the U.S. and European Union economies have become too large to ignore,” said economist Radhika Rao and currency strategist Philip Wee from Singapore’s DBS Bank in a note on Thursday.

“Negative surprises over Brexit talks are also expected at the EU Summit today.”

The Times newspaper has reported Europe’s leaders would demand the European Commission publish no-deal plans as the year-end deadline neared.

Sterling dipped 0.2% to $1.3237 in Asia.

“There is a very narrow range of possibilities at this point,” said Stephen Innes, a Bangkok-based strategist at brokerage Axi.

“A skinny free trade agreement with potential concessions on fisheries and state-aid vs. no-deal risk,” he said, with the latter potentially triggering a 10% drop in sterling.

Elsewhere the South Korean won dropped 0.6% 1,114.25 per dollar and dealers said they suspected central bank intervention after the finance minister vowed action to stabilise the currency market.

The Thai baht also softened for a second straight day and the central bank said it had intervened to slow its recent rise.

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