The euro weakened against the dollar amid the virus resurgence and localized lockdowns in different European countries. Rising dollar demand pushed the currency pair lower on Monday.
The British pound weakened last week. The Bank of England mentioned the possibility of the introduction of negative interest rates. Prime Minister Boris Johnson is expected to announce new restrictions on bars and restaurants as the number of COVID-19 cases in the UK grows rapidly. The chief scientific adviser warned on Monday that without urgent action, infections could lead up to 50,000 new cases a day by mid-October.
The Japanese yen strengthened on the rising risk off sentiment. The Bank of Japan kept its monetary policy steady stressing that the Japanese economy has started to pick up but remained in “a severe situation” due to the pandemic.
Overall, the dollar index rose as uncertainty and delays in US fiscal stimulus combined with mounting numbers of infections weighed on the global economic recovery. Safe haven demand for the greenback, at the expense of the risk assets, pushed the dollar higher.
Consequently, gold prices ended the week lower. US stock indexes fell sharply. Dallas Fed President Robert Kaplan said that U.S. stock valuations were already high, measured relative to gross domestic product, and that a correction could be "healthy".
Crude oil prices ended flat in choppy trading. Worries over a slow recovery in global fuel demand persisted. Libya’s National Oil Company said it expected oil production to rise to 260,000 barrels per day next week. Eastern Libyan commander Khalifa Haftar said last week his forces would lift their eight-month blockade of oil exports. On the other hand, the OPEC+ meeting reaffirmed its commitment to the full compliance of previously agreed liabilities.