Market and product

The U.S. dollar clung to gains on Tuesday on growing fears about a second wave of coronavirus infections and after the Federal Reserve played down the likelihood of negative interest rates, boosting the currency’s yield attraction.

U.S. Fed policymakers say they will do what it takes to cushion an economy crushed by widespread lockdowns aimed at slowing the spread of the coronavirus but likely stop short of cutting interest rates to below zero.

New coronavirus infections have been found in China, South Korea and Germany, where respective governments have eased lockdown restrictions.

A re-emergence of novel coronavirus cases could dent a global economic recovery which was supposed to be propelled by an injection of monetary and fiscal stimulus.

“While the numbers of cases was relatively small, they do play into market fears over the threat posed by a second wave of COVID-19 infections and highlight the challenging path ahead for the global economy,” said Lee Hardman, currency analyst at MUFG.

The euro was last up slightly against the U.S. currency at $1.0820 EUR=EBS, though still not too far from the $1.0636 low touched at the end of March when the pandemic sent markets into turmoil. - Reuters-