TOKYO (Reuters) – The dollar plagued major currency losses on Tuesday after encouraging data from the trial of a COVID-19 vaccine reduced demand for a safe haven for greenback.
FILE PHOTO: Pound and U.S. dollar bills seen on this illustration taken January 6, 2020. REUTERS / Dado Ruvic / Illustration
The euro continued to make big gains against the Swiss franc and the dollar following a proposal from France and Germany for a € 500 billion ($ 543 billion) recovery fund offering grants to regions most affected by the coronavirus crisis.
Currencies linked to commodities and other riskier assets were widely supported thanks to a sharp rebound in oil prices as investors focused on the recovery from the pandemic.
“There has been a significant improvement in risk sentiment due to the hope of a vaccine,” said Junichi Ishikwa, senior FX strategist at IG Securities in Tokyo.
“Volatility is falling for stocks and the cost of dollar financing is lower. It’s easy for the dollar to fall and for other currencies to ride the dollar’s losses higher. ”
Wall Street stocks, emerging market assets and commodities were all following encouraging data from a U.S. COVID-19 vaccine study Drug maker Moderna added the optimism as more governments scaled back restrictions.
The euro bought $ 1.0917 in Asia on Tuesday after winning 0.9% against the greenback in the previous session.
The single currency is trading at 1,0607 Swiss francs after jumping Monday to the high of more than two months.
The overnight Euro collection came after France and Germany proposed that the Commission borrow money on behalf of the EU for the recovery fund. The news also sent Italian government bond yields slipping to the lowest in more than a month.
The proposed fund is mostly expected to benefit Italy and Spain, whose economies have been hit hard by the coronavirus pandemic but have weak public finances.
The euro’s sudden rise faces a test later on Tuesday with the release of the closely monitored ZEW study on German investor sentiment.
The pound took advantage of the dollar losses and rose to $ 1.2215.
The dollar was slightly changed at 107.43 yen.
While coronavirus infection rates in many places have now dropped to levels low enough to allow factories and businesses to reopen, some concern remains because the outbreak is not completely under control.
The new coronavirus causing COVID-19 disease first appeared in China late last year and has crippled global economic activity as it spread throughout the world.
Elsewhere, the antipodean currencies stood high against their U.S. counterpart that benefits from the improvement in risk conditions and rising commodity prices.
The Australian dollar rose 0.25% to $ 0.6540.
Australia’s Reserve Bank is releasing protocols from its latest monetary policy meeting later on Tuesday, which could help investors determine the possibility of further monetary easing.
The New Zealand dollar rose 0.26% to $ 0.6055 after New Zealand’s Deputy Governor Geoff Bascand told Reuters that the central bank will reassess its monetary easing in about three months to decide whether to “do more or take the foot off the pedal a slightly. ”
Reporting by Stanley White; Editing by Shri Navaratnam