The U.S. dollar edged higher on Thursday as factors ranging from rising trade tensions to fears of a second wave of coronavirus fuelled demand for safe-haven currencies.

The dollar index advanced 0.1% to 97.30 but remained below a 2020 high of near 103 in late March.

“A plethora of bad news about the virus led to a major sell-off in risk assets yesterday as volatility returned to financial markets once again”, Deutsche Banks analysts said in a note.

The euro retreated to $1.1242. The British pound fell to $1.2410.

A resurgence of COVID-19 cases from the United States to Kyrgyzstan fuelled fresh fears that the V-shaped economic recovery expected by the market was in jeopardy.

The International Monetary Fund slashed its 2020 global output forecasts further, predicting more damage from the pandemic than it had previously expected.

Also souring the mood was news that Washington is considering changing tariff rates for various European products as part of the trading partners’ aircraft dispute.

Canada’s dollar weakened to a 10-day low versus the U.S. dollar after it became the first country to lose its AAA rating as a result of coronavirus-fuelled government spending.

“The far-reaching financial support the Canadian government has provided to cushion the effects of the corona restrictions have come at a price”, Commerzbank analysts commented.

Commodity currencies, which had been supported by a rally in oil and commodity prices, also fell. The Australian dollar dropped for a second consecutive session to $0.6861.