By Gina Lee
Investing.com – The dollar was down on Tuesday morning in Asia, starting the new month on a lower note even after closing its worst month since July in November. Giving the dollar a boost, however, was the expectation of more monetary easing measures from the U.S. Federal Reserve.
The U.S. Dollar Index Futures that tracks the greenback against a basket of other currencies edged down 0.12% to 91.903 by 9:27 PM ET (1:27 AM GMT).
Promising data from COVID-19 vaccine developers have driven investors towards riskier currencies and higher-yielding assets outside the U.S., leading to a shortage of dollars. Moderna Inc (NASDAQ:MRNA) plans to request clearance for its candidate mRNA-1273 in the U.S. and Europe after announcing that the vaccine was 94.1% effective. Pfizer Inc (NYSE:PFE) and BioNTech SE (NASDAQ:BNTX) are also awaiting word on their own approval request for its candidate BNT162b2, which will be reviewed before Moderna’s application.
The rising number of COVID-19 cases globally has also not provided much support to the dollar, with expectations growing that the Fed will step into boost the economy ahead of the vaccines.
Fed Chairman Jerome Powell will testify before Congress later in the day and on Wednesday, ahead of the central bank’s policy meeting on Dec. 15 and 16. Both events will be closely watched by investors for clues on next moves.
Some investors remained hopeful.
“There’s a general view that there’ll be something in the December meeting...given there’s no real fiscal development in the last few months,” BNZ senior markets strategist Jason Wong told Reuters.
Dallas Fed President Robert Kaplan also said on Monday that difficult months lie ahead. “We’re bracing ourselves here,” he said.
Kaplan added that the central bank is open-minded about shifting or even expanding its bond buying program, but “we are going to have to figure out whether it’s in the December meeting or a future meeting.”
The USD/JPY pair inched up 0.07% to 104.34.
The AUD/USD pair edged up 0.17% to 0.7358. The Reserve Bank of Australia will hand down its last policy decision for 2020 later in the day, although it is widely expected that no changes will be made. Across the Tasman Sea, the NZD/USD pair inched up 0.08% to 0.7023. The Antipodean risk currencies were reversing some of Monday’s losses but remained just below the milestone peaks seen on Monday.
The USD/CNY pair inched up 0.04% to 6.5789. The yuan was firm in offshore trade in the afterglow of Monday’s positive manufacturing and non-manufacturing Purchasing Managers Indexes (PMI). The Caixin manufacturing PMI is due later in the day, with the Caixin services PMI due later in the week.
The GBP/USD pair edged up 0.17% to 1.3343, with hopes that the U.K. and the European Union (EU) will reach a Brexit deal before the end of the month boosting the pound. Both sides warned the other that time was of the essence and talks between EU chief negotiator Michel Barnier and U.K. chief negotiator David Frost continue. The EU team are expected to stay in London for two or three more days for the talks.