The dollar rises as growth concerns weigh on the euro

NEW YORK (Reuters) – The dollar edged up against the euro on Wednesday as the risk of a prolonged foreclosure in Europe to combat the spread of COVID-19 and concerns about the pace of vaccine deployment weighed on the currency common.

European countries are struggling to contain the contagion of the coronavirus, fearing that a new variant of the virus could lead to tighter lockdowns and more economic suffering.

Investors are also worried about the slower pace of vaccine deployment compared to the United States and Britain could hamper economic recovery in the region.

Germany’s most populous state, North Rhine-Westphalia, said on Wednesday it would delay opening new vaccination centers until February 8 due to a temporary slowdown in vaccine deliveries from Pfizer PFE. N and its German partner Biotech.

“The euro slipped as the risk of longer lockdowns in Europe kept the threat of a double-dip recession alive,” Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, said in a note. .

The dollar was 0.2% higher against the euro, ahead of Thursday’s European Central Bank meeting, which, after the broad easing of monetary policy last month, is unlikely to produce any major change.

Investor appetite for riskier currencies was generally strong before Joe Biden’s inauguration as US president at noon (5:00 p.m. GMT) in Washington.

“The new administration is expected to push for a stronger stimulus package of almost $ 2 trillion in an effort to put the recovery on a better track,” Manimbo said.

US Treasury Secretary candidate Janet Yellen urged lawmakers at her confirmation hearing to ‘act big’ on stimulus spending and said she believes in market-determined exchange rates, without commenting on the direction of the dollar.

The risk-sensitive Australian dollar rose 0.79% on the day, while the New Zealand dollar rose 0.69%.

While the dollar has rallied in recent weeks thanks to higher yields on US Treasuries, investors still expect the currency to weaken.

Positioning data shows investors are massively short of dollars as they believe budget and current account deficits will weigh on the greenback.

A combination of heightened risk appetite in global markets and UK-specific optimism pushed the pound up on Wednesday, as it hit its highest level in nearly three years against the dollar.