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Euro climbs on vaccine optimism

Written by Business World, on 17th Nov 2020. Posted in EU

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The euro rose against the dollar on Tuesday, helped by optimism over another coronavirus vaccine, while the Chinese yuan hit its highest against the U.S. currency since June 2018.

Europe's shared currency, however, fell against a broadly stronger pound, which gained on media reports that Britain could reach a post-Brexit trade agreement with the European Union by early next week.

Drugmaker Moderna became the second U.S. pharmaceutical company in a week to report positive results from trials of a COVID-19 vaccine, considered necessary to eradicate the pandemic.

Last week, encouraging progress in vaccine testing helped the dollar rise against the safe-harbor yen and the Swiss franc.

Some of those moves reversed direction on Tuesday, with the yen gaining back ground against the dollar.

"Euro/dollar remains well-supported, buoyed by global optimism," said Chris Turner, global head of markets at ING in a note to clients.

"Given the challenges Europe faces – in the middle of a second lockdown – the euro certainly won't lead the rally against the dollar, but we think the dollar decline is broad enough to drag euro/dollar back to $1.1920."

The euro last traded 0.2% higher to the dollar at $1.18770.

Sterling last traded half a percent higher at $1.3266 and also edged up 0.3% to 89.51 pence per euro.

The greenback lost 0.3% to trade at 104.20 yen.

Investors in the dollar were looking ahead to the release of U.S. retail sales and industrial production later on Tuesday to gauge the health of the economic recovery.

However, policymakers' response to a record number of coronavirus cases, hospitalisations and deaths in several U.S. states is likely to remain of greater concern.

The dollar index against a basket of major currencies stood at 92.431, its lowest in more than a week.

New infections are also increasing in Britain, Europe and Japan, further clouding the economic outlook.

The Australian dollar held on to overnight gains against the greenback, while the New Zealand dollar fell back after hitting its strongest in more than a year as investors scaled back bets for additional interest rate cuts. Minutes from the Reserve Bank of Australia's most recent policy meeting showed the central bank was ready to provide yet more policy stimulus if needed after cutting rates to record lows.

The onshore yuan hit its highest since June 2018 against the dollar at 6.5457 as positive economic data continued to support the Chinese currency. (Reuters)

Source: www.businessworld.ie

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