FOREX-Dollar hits six-week highs, traders shun riskier currencies

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

LONDON, Sept 22 (Reuters) - The dollar rose on Tuesday to
six-week highs, extending gains from the previous session, as
markets turned risk-averse over a surge of virus cases and new
lockdown measures in Europe.
Stocks sold off on Monday and the currency market saw
"risk-off" moves, with the dollar index climbing to its highest
in six-weeks. Although European equities opened higher on Tuesday, the
dollar continued its ascent and riskier currencies fell, as new
lockdown measures to combat a second wave of COVID-19 infections
pose a threat to the global economic recovery.
The UK will see further restrictions on activity, although
Prime Minister Boris Johnson is expected to stop short of
announcing a full national lockdown like that imposed in March.
In Spain, the army have been asked to help fight a
coronavirus surge in Madrid, while restrictions in other
European countries were announced last week. "The terms 'second wave' and 'lockdown' have been with us
for a while, but so far the markets reacted only moderately
cautious to the negative news flow," said You-Na Park-Heger, FX
analyst at Commerzbank.
"However, as the situation seems to be deteriorating,
particularly in Europe, the markets nonetheless seem to be
getting nervous at this stage," she said.
Park-Heger said that even though Commerzbank does not expect
more extensive lockdowns, the possibility may weigh on market
sentiment for some time.
"A rapid correction of yesterday's move is therefore
unlikely to be seen any time soon," she said.
The dollar index was up 0.3% at 93.848 at 0739 GMT, reaching
six-week highs in early London trading =USD .
Riskier currencies extended their losses, with the
Australian dollar falling 0.5% to 0.7185 AUD=D3 , a one-month
low. The New Zealand dollar dropped 0.4% to 0.6643 per U.S.
dollar NZD=D3 .
The Reserve Bank of Australia said it is assessing policy
options including currency market intervention and negative
rates, which added to pressure on the Australian dollar.
"Coupled with the Nov US Presidential elections, the outlook
for risk assets is likely to be tricky for coming weeks and
months," wrote ING strategists in a note to clients.
ING said that it did not expect the dollar to see
long-lasting gains, however, as dollar liquidity was not an
issue as it was in March, and the U.S. Federal Reserve would
step in if risk sentiment fell further.
"For DXY, we expect the 94.00 level to be strong resistance
this week," they said.
The euro was down 0.4% against the dollar at $1.17235
EUR=EBS .
The Swedish and Norwegian crowns also fell, reaching a
two-month low of 9.3615 against the dollar at 0725 GMT NOK=D3
and also weakening against the euro EURNOK=D3 .
Sweden's Riksbank kept its rate unchanged at 0%, as
expected, and said it is expected to remain there in the coming
years. U.S. Fed Chair Jerome Powell will speak at a congressional
committee from 1430 GMT.