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Forex News: Dollar Strengthens On Risk Aversion

Dollar Strengthens On Risk Aversion

10/28/2020 - 07:49:00 (RTTNews)

(RTTNews) - The U.S. dollar was higher against its most major rivals in the European session on Wednesday, as uncertainty around the U.S. Presidential election and concerns about a second national lockdown in France dented the risk sentiment.

The surge in new coronavirus cases and the imposition of fresh lockdown restrictions fueled concerns about the global growth prospects.

French President Emmanuel Macron is expected to announce a nationwide lockdown after a spike in Covid-19 deaths.

The government is likely to impose a four-week national lockdown from midnight on Thursday.

German newspaper Bild reported that Chancellor Angela Merkel is pushing state leaders to agree to close all restaurants and bars from November 4 to curb coronavirus infections.

U.S. election uncertainty looms, with recent polls showing former Vice President Joe Biden with a narrow lead over President Donald Trump.

Hopes for further stimulus receded after Trump admitted that talks have collapsed for a coronavirus stimulus package before Election Day.

"After the election, we will get the best stimulus package you have ever seen," Trump told reporters at the White House.

The greenback reached as high as 1.2963 against the pound, setting a 1-week high. The greenback is poised to find resistance around the 1.28 level.

The greenback appreciated to a 9-day high of 1.1736 against the euro from Tuesday's closing value of 1.1795. If the greenback rises further, 1.16 is likely seen as its next resistance level.

Data from Destatis showed that German import prices dropped at a faster pace in September driven by a sharp fall in energy prices.

Import prices declined 4.3 percent year-on-year, faster than the 4 percent decrease seen in August.

The greenback registered a 9-day high of 0.9122 against the franc, compared to Tuesday's closing quote of 0.9086. The greenback may challenge resistance around the 0.94 level.

The greenback climbed to a 5-day high of 0.6659 against the kiwi and near a 2-week high of 1.3254 against the loonie, compared to yesterday's closing values of 0.6708 and 1.3184, respectively. The next likely resistance for the greenback is seen around 0.645 against the kiwi and 1.37 against the loonie.

The U.S. currency spiked up to a 1-week high of 0.7073 against the aussie, from a 5-day low of 0.7157 hit at 1:45 am ET. Immediate resistance for the dollar is likely seen near the 0.68 level.

Data from the Australian Bureau of Statistics showed that consumer prices in Australia rose 0.7 percent on year in the third quarter of 2020 - in line with expectations following the 0.3 percent decline in the previous three months.

On a quarterly basis, inflation climbed 1.6 percent - exceeding expectations for 1.5 percent following the 1.9 percent contraction in the three months prior.

In contrast, the greenback dropped to 104.11 versus the yen, its lowest level since September 21. On the downside, 100 is possibly seen as its next support level.

Looking ahead, U.S. wholesale inventories and advance goods trade balance for September will be published in the New York session.

At 10:00 am ET, the Bank of Canada announces decision on interest rates. Economists forecast the benchmark rate to remain at 0.25 percent.

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