Early trade in New York: Dollar rises to over one-week high

NEW YORK: The dollar rose to a more than one-week high on Monday in a holiday-shortened week on fears about a fast-spreading new coronavirus strain that was discovered in the UK, prompting investors to seek safety in the greenback.

Sterling fell, as a consequence, to a 10-day low against the dollar and euro, in line with the yield on two-year British government bonds falling to a record low. Prime Minister Boris Johnson sought an emergency response to the crisis.

The pandemic stress in Europe overshadowed a weekend deal among US congressional leaders for a $900 billion coronavirus aid package. In mid-morning trading, the dollar index gained 0.2% to 90.43, after it sank to two-and-a-half-year lows last week, driven by optimism that vaccines would help revive global growth. Earlier in the session, it rose to a two-week high of 91.022.

The euro fell 0.4% to $1.2205, after earlier dropping to a 10-day trough as well. The pound slumped 1.6% versus the dollar to $1.3303, while the euro gained 1.1% against sterling to 91.73 pence. The riskier Australian and New Zealand dollars weakened at the start of the week as investors rushed for haven assets.

The Aussie dollar dropped 1.35% to 75.35 US cents, while the New Zealand dollar fell 1.4% to 70.44 US cents. The US dollar gained 0.3% against the yen to 103.57 yen, another safe haven.