European session review: USD weakens amid rising coronavirus infection rates and intensifying U.S.-China tensions

USD traded lower against most major rivals in the European session on Friday after the U.S. set another single-day record of coronavirus infections. The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, dropped 0.29% to 96.06.

The New York Times estimated that the U.S. reported 75,600 new coronavirus cases on Thursday, which marked the 11th time in the past month that the country's daily record had been broken. Overall, the U.S. has 3,576,430 cases of COVID-19, the most in the world, according to the Johns Hopkins Center for Systems Science and Engineering. Deaths in the country increased to 138,359, also the most in the world. The total number of confirmed global coronavirus cases rose to 13,810,534 and deaths grew to 590,004.

Growing coronavirus infections forced many businesses and states to reimpose lockdowns. This raised concerns about the pace of U.S. economic recovery. 

Meanwhile, intensifying U.S.-China tensions underpinned demand for the U.S. currency, limiting its further decline against rivals. The administration of U.S. President Donald Trump is considering a travel ban for all members of the Chinese Communist Party and their families, Reuters reported, citing a person familiar with the matter. Deteriorating U.S.-China relations mitigate overall risk appetite. 

In addition, market participants remained cautious ahead of the summit of the EU leaders later today in Brussels, at which they will discuss both a EUR750 billion regional coronavirus recovery fund and the EUR1.1 trillion budget proposal for the next six years. EUR strengthened ahead of the summit.

The European Central Bank’s (ECB) President Christine Lagarde urged the EU leaders to act quickly on the "ambitious package" given the uncertain economic outlook.