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FOREX-Dollar weakens on vaccine, U.S. stimulus optimism

Published 10/12/2020, 02:22 am
Updated 10/12/2020, 02:24 am
© Reuters.
EUR/USD
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USD/CHF
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AUD/USD
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USD/SEK
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USD/CNY
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DX
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* Aussie dollar, Chinese yuan hits 2-1/2-year high vs dollar

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E (Adds new comment, FX table, updates prices, changes byline, dateline; previous LONDON)

By Gertrude Chavez-Dreyfuss

NEW YORK, Dec 9 (Reuters) - The dollar fell against most currencies in choppy trading on Wednesday, as progress in battling the coronavirus pandemic with positive vaccine news and prospects of more U.S. fiscal stimulus lifted risk appetite and weakened the greenback.

Riskier currencies, including the Australian and New Zealand dollars AUD=D3 as well as the Chinese yuan CNY=CFXS led gains against the dollar. Both the Aussie unit and Chinese currency hit 2-1/2-year peaks.

With U.S. coronavirus cases exceeding 15 million on Tuesday, regulators moved a step closer to approving a COVID-19 vaccine, while Britain started inoculating people on Tuesday. are also tracking negotiations over U.S. coronavirus aid, with the Trump administration proposing a $916 billion package on Tuesday after congressional Democrats rejected a slimmer plan. narrative that the market is working off for now is that there would be a reflationary environment in the United States with the additional stimulus," said Ranko Berich, head of market analysis at Monex Europe.

"So you have a Federal Reserve that's signalling very clearly that it has a very dovish reactive function and would be very strongly accommodative. This environment overall is conducive to dollar weakness," he added.

In mid-morning trading, the dollar was little changed to slightly lower against a basket of currencies =USD at 90.88. It reached an April 2018 low of 90.47 last Friday.

The dollar's losses have been most severe versus the euro in recent weeks as economic activity data suggested Europe is outperforming the United States.

The euro was flat to slightly higher against the dollar at $1.2101 EUR=EBS . It was on track for an annual gain of 8%, its largest since 2017.

German investor sentiment rose in December on expectations that vaccines against the coronavirus will boost the economic outlook, a survey showed this week. YUAN

The dollar dropped to 6.5198 yuan in onshore trading CNY=CFXS , its lowest since June 2018, putting the yuan up by more than 10% from its May lows, boosted by the softer dollar and steady inflows into Chinese stocks and bonds. CNY/

Sterling was volatile GBP=D3 , up 0.6% against the dollar at $1.3417 before a Wednesday dinner between British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen in Brussels that is seen as a last-ditch attempt to salvage a Brexit trade deal. a Brexit trade deal is the likeliest outcome, although a complete collapse in talks cannot be ruled out," said Monex's Berich.

Rumblings in the money markets grew with swap markets indicating a growing demand for dollars heading into the end of the year. Three-month euro cross-currency basis swap spreads EURCBS3M=ICAP widened to minus 27 basis points, but were well below a March peak of nearly minus 90 basis points.

The Australian dollar rose to its highest since June 2018 against the greenback and was last up 0.9% at US$0.7472.

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Currency bid prices at 10:08AM (1508 GMT) Description

RIC

Last

U.S. Close Pct Change

YTD Pct

High Bid

Low Bid

Previous

Change

Session

Dollar index

=USD

90.8990

90.9160

+0.00%

+0.00%

+90.9340

+90.6880 Euro/Dollar

EUR=EBS

$1.2099

$1.2104

-0.04%

+7.92%

+1.2148

+1.2096 Dollar/Yen

JPY=D3

104.2450

104.1600

+0.10%

-4.01%

+104.2550

+104.0600 Euro/Yen

EURJPY=

126.11

126.07

+0.03%

+3.41%

+126.5100

+126.0200 Dollar/Swiss

CHF=EBS

0.8892

0.8890

+0.03%

-8.11%

+0.8897

+0.8872 Sterling/Dollar

GBP=D3

1.3413

1.3359

+0.42%

+1.15%

+1.3477

+1.3354 Dollar/Canadian

CAD=D3

1.2772

1.2821

-0.37%

-1.68%

+1.2819

+1.2773 Aussie/Dollar

AUD=D3

0.7466

0.7410

+0.76%

+6.41%

+0.7485

+0.7405 Euro/Swiss

EURCHF=

1.0756

1.0760

-0.04%

-0.88%

+1.0782

+1.0754 Euro/Sterling

EURGBP=

0.9016

0.9060

-0.49%

+6.65%

+0.9081

+0.8985 NZ Dollar/Dollar NZD=D3

0.7059

0.7044

+0.20%

+4.89%

+0.7094

+0.7036 Dollar/Norway

NOK=D3

8.7700

8.7600

+0.05%

-0.09%

+8.7720

+8.6960 Euro/Norway

EURNOK=

10.6110

10.6140

-0.03%

+7.85%

+10.6270

+10.5435 Dollar/Sweden

SEK=

8.4699

8.4735

+0.00%

-9.39%

+8.4999

+8.4366 Euro/Sweden

EURSEK=

10.2462

10.2461

+0.00%

-2.13%

+10.2890

+10.2425

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https://tmsnrt.rs/370Duku

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