World Looks to Vaccine for Hope, Dollar Sink
The U.S. Dollar is experiencing strong moves, particularly a rally against it developing as a result of vaccine progress from company Pfizer, claiming that it can prevent 90.0% of infections.
The Japanese Yen and the Swiss Franc are truly the only currencies conceding any ground to the buck as their status as safe-haven assets plummet in the midst of so much risk-appetite. Stocks worldwide seem to be surging to all-time record highs. This is all happening after a weekend in which the final result of the Presidential election was called for Joseph Biden, former Vice-President and Senator from the state of Delaware.
Emerging market currencies are set to have a good day with speculation growing that a Biden administration certainly establishes a low-interest environment to aid the global recovery narrative. Petro-currencies are sure enjoying the improved outlook as the Mexican Peso hit its strongest level since mid-March.
We have a few items to watch this week along with data, primarily Brexit talks resuming today and a special online meeting between top central bankers on Thursday named “Central Banks in a shifting world.” We shall see await a finance ministers’ meeting for the G-20 on Friday. Per the Bloomberg Dollar Spot Index, this is the weakest buck since April 2018.
What to Watch Today…
- No major events scheduled for today
How will the three election outcome scenarios affect USD? Find out here…
The Euro is trading back at strong levels following an eventful weekend and ahead of a busy week as leaders gather for various reasons throughout. Statements from European Central Bank Chairwoman Christine Lagarde will be monitored as central bankers join in trying to figure out this new low-interest environment and address concerns about the extent to which monetary policy can aid a hurt global economy.
Let Euro be the gauge for what is the limit for the dollar’s weakening trend or if it will continue into new historical levels.
The rapid rise of MXN over the weekend may be a sign of things to come as risk-on sentiment dominates markets with a combo of an electoral result, the vaccine news, and overall feeling in oil markets that production cuts are not all that necessary, which boosts prices per barrel. Commodity-based markets will cheer as the hope is that the dynamics of commercial trade and shipping return to pre-COVID levels.
Additionally, we will need to see if the rally is sustained and if the breakthrough that significant. It has been a long and arduous 2020 that never ceases to surprise itself. For now, buck looking to get crushed by optimism.
Catch the latest movements in FX in our November Currency Outlook…