Forex-US Dollar To Suffer Weekly Loss: Increased Risk Sentiment Due To Vaccine Progress

US Dollar
US Dollar

Following Biden’s victory and vaccine progress, there was an increase in the risk appetite. On Friday, the US dollar fell against other currencies and was set to a weekly loss. Riskier currencies will most likely have weekly gains.  

The dollar’s decline was interrupted when Steve Mnuchin decided to end part of the Fed’s pandemic lending on Thursday. That news saw the US dollar spike up in London trading.

The declaration curtailed optimism formed by the news that Democratic and Republican senators will resume their talks on the COVID-19 stimulus package.

But by GMT, the dollar had fallen by 0.1% at 92.288 on this quiet day at 12:03 GMT for financial markets.

The US dollar has dropped for 8 out of the past 10 sessions, due to an increase in the risk appetite of currency traders. 

US Dollar
US Dollar

Pfizer Inc has applied for authorization of emergency use in the US for its vaccine.

Pfizer with its partner BioNTech has claimed the effectiveness of its vaccine as 95% which has spiked market sentiment.

For equity markets, one year is the horizon but fr currency and bond markets the upcoming 3-6 months are important, said FX strategist, Kenneth Brounx, Societe Generale.To know the speed of the travel, Brounx said that they are waiting for the news of PMIs in the UK and Europe for Monday.

Euro Vs The US Dollar

The euro appeared flat versus the dollar, at 12:13 GMT at $1.18710.It was set for a weekly gain, but it was due to dollar weakness and not euro strength, according to Broux.

The EU leaders fought over Poland and Hungary and vetoed the $2.14 trillion($1.8 trillion-euro) package and asked for another agreement over more time. The Euro remained unaffected.ING strategists commented that a common solution is likely to be found ending the hurdle of EUR/USD upside for 2021, and taking note of the soft wider USD environment.

There is a drawback of new impulses for letting EUR-USD cross the 1.16-1.19 range, wrote You-Na-Park-Heger, the Commerzbank strategist.

There is optimism surrounding the possible vaccine but the excitement about that question has come down notably, The Central Bank of Europe will possibly increase aid in December.

Other Currencies Vs The US Dollar

Australian dollar(a liquid proxy of risk appetite) is performing best against the dollar via percentage change since April this month.

It increased by 0.4% at 0.73105 against the dollar at 12:15 GMT.

The NZ dollar hit 2-year highs for 0.6949 due to risk appetite being positive. It also got boosted last week after traders reduced their expectations of negative rates following the upgradation of estimates for GDP growth by the central bank.

The yen fell by 0.1% versus the dollar at 12:19 GMT at 103.82.

Republican leaders(Michigan) and President Trump will meet at the House for overturning the election result which his campaign is currently pursuing.

Elsewhere, though Bitcoin didn’t came near to the $18,483 three-year high of Wednesday.