The dollar holds firm amid lockdowns; The euro looks to the ECB By Investing.com

By Peter Nurse

Investing.com – The dollar was largely unchanged in early European trading Thursday, clinging to recent gains as new lockdowns in Europe to combat rising Covid-19 cases fueled demand for safe havens.

As of 2:55 am ET (0655 GMT), the dollar index, which tracks the dollar against a basket of six other currencies, was flat at 93.403, having gained about 0.5% so far this week.

Concern over further damage to the economic recovery has risen as French President Emmanuel Macron and German Chancellor Angela Merkel returned their countries to lockdown on Wednesday, after recording new record levels of cases in the second wave of the Covid virus. -19.

rose 0.1% to 1.1746, after sliding to a week-long low of $ 1.1718 overnight, on speculation that the European Central Bank could raise additional stimulus, which many expect for the December meeting, to today’s meeting.

“The case for further ECB easing has gotten even stronger lately, but we still expect the central bank to wait until December with more easing,” analysts at Nordea said in a research note.

“What the ECB could do next week is explicitly commit to a faster pace of buying, or at least give clear signals that there will probably be more easing in December. The last step is more likely than the previous one and should be enough to avoid a disappointment in the financial markets, ”the bank added.

It’s also a heavy day for US data, with the weekly report in focus. It will provide more dramatic headlines, but the data has already been essentially outstripped by the events of the past few weeks.

On the other hand, it remained virtually flat at 104.28, after the dollar fell to its lowest level in more than a month against the safe-haven yen on Wednesday.

It kept its key interest rates and asset purchases unchanged early Thursday, as widely expected. However, the central bank cut its growth forecast for the year ending March to a 5.5% contraction from a 4.7% drop, citing a delayed recovery in the services sector.

rose 0.2% to 1,3002, showing some strength as European Union and UK negotiators continue discussions on trade deals between the two blocs, raising hopes that a Brexit deal can be reached by beginnings of November.