The dollar weakened early European trade Wednesday, weighed by signs the surge in coronavirus vases is hitting the U.S. consumer while the country’s political scene remains divided.
At 3:55 AM the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.2% at 92.245. EUR/USD climbed 0.2% to 1.1883, USD/JPY fell 0.3% to 103.91, while the risk sensitive AUD/USD rose 0.1% to 0.7304.
U.S. retail sales rose by just 0.3% in October, at the slowest pace in six months, while the previous month saw a downwardly revised 1.6% gain. This suggests consumers, who have driven the economic rebound, are becoming more cautious given the surging numbers of coronavirus cases in the country.
Elsewhere, GBP/USD climbed 0.3% to 1.3276 after the Sun newspaper reported that a trade deal between the EU and the U.K. could arrive “early next week.”
The currency could strengthen to $1.35 by mid-2021 if the two sides negotiate a free trade agreement, according to a Bloomberg survey of analysts, a level not seen since December 2019.
The Chinese yuan has gained nearly 9% against the dollar since late May, despite the central bank taking various actions to limit its strength.