Risk currencies drop on fears of second coronavirus wave

The dollar gained, while commodity currencies dropped as investors turned away from risky currencies amid fears of a second coronavirus wave lambasting major economies including China, Japan, and the United States.

Beijing reported new infections for the second day on Monday, while the United States posted 25,000 new cases on Saturday alone.

The dollar index rose overnight and steadied in early London trade. It was up 0.2% at 0700 GMT.

The Aussie fell 1% on the dollar, while the kiwi lost 0.7%. 

Despite the rush for safe-haven currencies, the yen barely gained on the dollar and stood at 107.28. The Swiss franc sat at 1.0723 on the euro. 

Analysts said that the market’s favor for the dollar is the result of the currency’s recent declines as evidenced by the lack of strength in safe-haven currencies.

European countries lifted some border restrictions on Monday, a move that could help boost the region’s travel and tourism.

The euro fell 0.2% to 1.1232 against the dollar. The most-traded exchange rate could be repriced in the next few weeks with the euro forecasted to surge 6% on the dollar by the end of the year.