Early on Monday, commodity currencies like the AUD and NZD have weakened against the US dollar amid fears of a second wave of coronavirus after China reported an increase in the number of cases in Beijing and sent the markets into a risk-off mood. At the time of writing, the safe haven appeal of the US dollar has gained strength with the US dollar index DXY trading around 97.11.

Other currencies like the Chinese Yuan and the GBP have also slid lower against the greenback as a result of the change in the market sentiment. While USD/CNH turned bullish amid reports of a new cluster of cases in a wholesale food market in Beijing, GBP/USD has weakened due to worries about Brexit negotiations between Britain and the EU making no progress.

Meanwhile, the number of coronavirus infections in the US has also risen higher over the past few days, heightening worries of the government calling for more lockdown restrictions even as the economy begins to reopen gradually. Worries about the second wave of coronavirus are supporting the safe haven appeal of the US dollar in markets for now.

A second wave of the pandemic could force countries to reinforce strict lockdown measures all over again and delay any hopes for economic recovery which had been building up in recent weeks. Global financial markets had been trading optimistic over the past few weeks amid hopes of economies restarting and working their way out of recession, but a second wave could cause further economic damage.