Dollar Edges Down to Reach Weekly Loss

the dollar fell just shy of its lowest value in three months and was on the course for a weekly loss against a basket of major currencies. Markets, on the other hand, continued their rally on hopes of a global economic recovery and vaccine progress

On Friday, the dollar fell just shy of its lowest value in three months and was on the course for a weekly loss against a basket of major currencies. Markets, on the other hand, continued their rally on hopes of a global economic recovery and vaccine progress. So far, the dollar has declined by 2.2% this month, as global market sentiment experienced a boost following the victory of Joe Biden in the US election, a commodity surge and positive news about COVID-19 vaccines. This ended up reducing the demand for the safe-haven currency. In early London trading, market sentiment remained mixed, after doubts were raised by several scientists regarding the success rate of the vaccine developed by British pharmaceutical company, AstraZeneca. 

However, European shares saw an increase as the session moved on. The drug-maker had said on Monday that their vaccine had shown 70% effectiveness in pivotal trials, and could end up being 90% effective. This had been the latest positive announcement regarding a COVID-19 vaccine and had given investor confidence a solid boost, even as coronavirus hospitalizations in the United States had reached a record high. Analysts said that markets had chosen to overlook the fact that they would have a nasty quarter 4 and a similar first quarter as well, regarding economic data in the United States and Europe, and were looking for better times ahead.

Different stock market indices have reached all-market highs, which has kept the dollar under pressure. The pressure is also there because of the perception that the Fed will act, in case there is a delay in the fiscal package. The latest meeting minutes of the US Federal Reserve said that policymakers would provide new guidance about bond-buying ‘fairly soon’. The dollar had declined by 0.1% at 1213 GMT and was trading at 91.996, after hitting its lowest earlier in the week, since September 1st

Market strategists said that they expected the dollar to continue oscillating around this level on Friday, as there were no major catalysts. According to analysts, the volumes would be on the lower side because the trading hours will be reduced in the United States on Friday, after the Thanksgiving holiday on Thursday. The Australian dollar reached its highest in almost three months in early London trading and had risen by 0.2% at 1215 GMT. The second-largest state in Australia, Victoria had been the hotspot for coronavirus infections, but has now gone 28 days without reporting any. 

As far as the New Zealand dollar is concerned, it seems to be having its best month since 2013, and had increased by 0.1% on the day. Analysts said that now the biggest risks for the markets was the failure of the COVID0-19 vaccines being rolled out smoothly in the first quarter of 2021. The other prominent risk is the surge in deaths and infections in the US, which might prompt President-elect Joe Biden to impose new lockdown restrictions, which would give further reasons for selling the US dollar. Dollar-yen had declined by 0.1% at 1215 GMT. 

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