The euro declined on Wednesday as Covid-19 surged in Europe

The euro tumbled down against the U.S. dollar on Wednesday. According to a media report, France’s government is leaning toward reinstating a national lockdown to fight a resurgence in Cvodi-19 cases. This news caused the common currency’s decline.

 

On the other hand, the dollar also lost early gains and plummeted down against the Japanese yen as sentiment turned bearish. Uncertainty about the outcome of the U.S. presidential election next week clouds the market.

 

Junichi Ishikawa, the senior foreign-exchange strategist at IG Securities in Tokyo, stated that the surge in Cvodi-19 cases is certainly a concern for France and southern Europe. As a result, the euro’s upside is heavy. Moreover, he does not expect the greenback to gain much versus other currencies. According to Ishikawa, people have been very complacent about how markets will react after the United States’ election.

 

On Wednesday, the euro lowered by 0.14% to $1.1780, dropping down for a third consecutive session. The British Pound was steady at $1.3043. Hopes for a last-minute trade deal between Britain and the European Union supported the Sterling.

 

The dollar tumbled down to 104.23 yen, nearing a one-month low. Traders are preparing for more volatility in FX markets as the Covid-19 spreads rapidly in the United States, Europe, and Britain, bolstering fears that economic growth will weaken once again.

 

On Wednesday evening, French President Emmanuel Macron plans to give a televised address. His office has not stated what the speech is about. However, local media has announced that the government is considering imposing a lockdown from midnight on Thursday.

 

Investors are focusing on the U.S. elections

 

Despite Europe’s struggle with the pandemic, the bigger focus remains on the United States, which is also fighting to contain the Covdi-19 as people vote early before elections on Nov. 3.

 

According to polls, Democrat rival Joe Biden has a lead over Republican President Donald Trump. However, some traders are sceptical as the polls did not predict Donald Trump’s victory four years ago.

 

Meanwhile, sentiment for the U.S. dollar has also weakened after Trump stated that an additional round of U.S. fiscal stimulus is unlikely before the election.

 

The onshore Chinese yuan dropped down slightly to 6.7097 against the greenback, extending a pullback from a 27-month high hit last week. The People’s Bank of China is taking steps to lessen the currency’s appreciation.

 

On the other hand, the Australian dollar climbed up higher due to the data showing that consumer prices in the third quarter increased by 1.6% from the previous quarter.

 

Traders expect the Reserve Bank of Australia to lower interest rates. They also think that the bank will expand its government debt purchases at its next meeting.