FOREX-U.S. dollar gains on rising COVID-19 cases, lockdown risk in Europe

    * Germany, France to announce restrictions as COVID cases rise
    * Implied volatility rises in yen, euro
    * Yen rises to 1-month high vs dollar, 3-month high vs euro
    * Graphic: World FX rates in 2020

 (Adds new comment, FX table, updates prices, changes byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Oct 28 (Reuters) - The safe-haven dollar rose on Wednesday, pushing the euro to one-week
lows on prospects of a national lockdown in Germany and France as coronavirus cases surged, with implied
volatility gauges in the common currency and the yen hitting multi-month highs as traders positioned for
next Tuesday's U.S. election.
    Germany and France were preparing to announce restrictions approaching the level of last spring's
blanket lockdowns on Wednesday as COVID-19 deaths across Europe rose almost 40% in a week, while financial
markets tumbled on fears of the likely economic costs.
    The European Commission proposed on Wednesday a series of new measures to fight the COVID-19 pandemic
in the European Union, saying the new spike in infections on the continent was "alarming".
    Vassili Serebriakov, FX strategist at UBS in New York, said rising COVID-19 cases in Europe and around
the world and the potential for renewed lockdowns have dented the market's appetite for risk.
    With news that Pfizer Inc has not yet been able to determine how well its late-phase COVID-19
vaccine protects against the disease adding to the cautious mood, riskier assets fell across markets.
    At the same time, traders are bracing for volatility going into and after the U.S. election.
    Democratic presidential candidate Joe Biden leads Republican President Donald Trump nationally by 10
percentage points, according to a Reuters/Ipsos poll.
    "We are seeing some position-trimming ahead of the election, with the market still short dollars,"
said UBS' Serebriakov. 
    "The expectation is for a Biden presidency and that is consistent with a weaker dollar story. But as
some of the polls have tightened the last couple of days, markets are just taking some risk off the table
given the uncertainty," he added.
    The UBS strategist said a Biden administration is seen de-escalating trade tensions with traditional
allies such as Europe and Canada, as well as China, which should improve market sentiment overall and
weigh on the dollar as a safe haven.
    In midmorning trading, the euro was down 0.5% against the dollar at $1.1736, after sliding
to a one-week low.
    The dollar though slipped 0.1% against the yen to 104.33 yen. Earlier, the greenback dropped
to a more than one-month low.
    The euro also fell 0.6% against yen to 122.44 yen, after earlier sinking to its weakest
since July. 
    One-week implied volatility gauges in euro and yen rose to their highest in nearly seven months.

    That suggests investors are preparing for sharp price moves, with the biggest focus on the United
States as it struggles to contain its coronavirus epidemic ahead of the pivotal election next Tuesday.
    Legal battles between Republicans and Democrats over how to count votes have raised the risk that the
outcome of the election will be disputed.
    The dollar index, which tracks the greenback against a basket of six currencies, was up 0.3% at
    Elsewhere, the British pound fell 0.7% versus the dollar to $1.2958.
    Currency bid prices at 9:58AM (1358 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar                  $1.1735        $1.1796     -0.51%         +4.68%      +1.1799     +1.1718
 Dollar/Yen                   104.3250       104.4350    -0.09%         -3.94%      +104.5500   +104.1700
 Euro/Yen                     122.42         123.14      -0.58%         +0.39%      +123.1800   +122.1900
 Dollar/Swiss                 0.9110         0.9088      +0.25%         -5.84%      +0.9127     +0.9086
 Sterling/Dollar              1.2953         1.3047      -0.76%         -2.38%      +1.3063     +1.2918
 Dollar/Canadian              1.3280         1.3187      +0.71%         +2.23%      +1.3295     +1.3180
 Aussie/Dollar                0.7060         0.7129      -0.97%         +0.62%      +0.7157     +0.7050
 Euro/Swiss                   1.0690         1.0716      -0.24%         -1.49%      +1.0719     +1.0687
 Euro/Sterling                0.9058         0.9041      +0.19%         +7.13%      +0.9076     +0.9015
 NZ                           0.6645         0.6708      -0.92%         -1.23%      +0.6719     +0.6638
 Dollar/Norway                9.3475         9.1920      +1.70%         +6.57%      +9.3825     +9.2100
 Euro/Norway                  10.9700        10.8310     +1.28%         +11.51%     +10.9985    +10.8002
 Dollar/Sweden                8.8295         8.7226      +0.70%         -5.54%      +8.8579     +8.7200
 Euro/Sweden                  10.3610        10.2887     +0.70%         -1.03%      +10.3827    +10.2700
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Olga Cotaga in London; Editing by
Jonathan Oatis)