TOKYO (Reuters) – The U.S. dollar held onto gains against most currencies on Wednesday as renewed questions about a coronavirus vaccine and lack of an agreement on additional U.S. fiscal stimulus prompted a shift to safer assets.
During the Asian session, the yuan will be in focus as traders watch to see whether Chinese officials’ efforts to slow the currency’s rise continue to have an impact.
The euro and British pound are likely to extend declines, analysts said, as a return of restrictions on economic activity in Europe and Britain to battle a second wave of coronavirus infections unnerves investors.
Moves are likely to be subdued as the U.S. presidential election looms on Nov. 3, but analysts said sentiment is leaning against riskier bets, which should support the dollar in the coming days.
“Many factors are pointing to more upside for the dollar,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.
“U.S. stimulus may not come until after the election. The People’s Bank of China is halting the yuan’s rise. There’s no reason to buy the euro, and there are a lot of euro longs that need to be unwound.”
The dollar last stood at $1.1744 per euro
, holding onto a 0.6% gain from the previous session.
traded at $1.2936, nursing a 1% loss from Tuesday.
Sterling also took a hit due to worries about little progress in trade talks between Britain and the European Union and the chance the Bank of England will adopt negative interest rates.
Risk appetite has weakened after Johnson & Johnson
said on Tuesday it is pausing a clinical trial of a coronavirus vaccine and Eli Lilly and Co
also said it paused a coronavirus antibody treatment.
Hopes are fading that U.S. Republicans and Democrats will reach an compromise on a new round of fiscal stimulus, which would deal a blow to the economic outlook.
Both developments are supporting the dollar, traders said.
The Australian dollar
was little changed in early Asian trade but is likely to add to its 1% decline on Tuesday due to concern about a row with Beijing over coal imports, traders said.
Across the Tasman Sea, the New Zealand dollar
held steady against its U.S. counterpart.
(Reporting by Stanley White; Editing by Christopher Cushing)
Copyright 2020 Thomson Reuters.