Similar to last week, Dollar down on vaccine hopes
The U.S. Dollar is having a déjà vu Monday as last week’s start was very much like this one: buck sinks to its lowest value since 2018, once again, as developments on the vaccine front keep shedding light on a solution to the pandemic.
Indeed, the dollar is seeing peers all across the board appreciate based on the belief that Pfizer, Moderna, Inc., and Astra-Zeneca plc have reached a highly successful formula that could prevent further infection. As a result, risk-on sentiment cannot be denied, and energy companies are set to have major gains with the WTI Crude already above $43.00/barrel. European stocks certainly enjoyed the news and Euro keeps gaining at the time of writing.
We have Purchasing Managers’ Index figures out this morning at 9:45 AM, Fed Minutes on Wednesday, and are closed Thursday in observance of the Thanksgiving holiday. Today, we shall see if the government makes any announcements as states like Nevada and Pennsylvania get ready to certify their vote count. There may also be a headline or two about a fiscal rescue package, still needed despite vaccine news. We shall see how much FX flows continue to find a definite direction as we navigate through a risk-friendly environment.
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The Euro rose despite disappointment in contracting PMI figures throughout the continent, especially for its bigger economies. German and French measures of business investment revealed that the services sector is suffering the most from the renewed lockdown approach.
However, there may be some light at the end of the tunnel as countries like Spain and Belgium have seen infections go down while Italy and Portugal are also seeing better stats. Overall, these nations may ease restrictions sooner rather than later and aid the global recovery, thus hurting the greenback.
The Pound rose to its highest level since the start of September and could break through to its best level in two years. There is optimism about new spending for the Autumn budget and although European officials are isolating because of COVID measures, there are video conferences happening with a friendlier tone and some determination to have something clearer by year’s end.
The U.K. could also benefit from the trade pact in the Pacific Rim between China, the U.K., and South Korea, three nations the U.K. was already hoping to have to deal with without being members of the EU.