Riskier currencies gain on vaccine hopes; dollar hits one-month low

Wednesday,   15-Jul-2020   02:17 PM (IST)

Risk sentiment was upbeat in currency markets on Wednesday, as signs of progress towards a COVID-19 vaccine and a Wall Street equities rebound on Tuesday pushed commodity currencies higher and the dollar to a one-month low. Moderna Inc’s experimental vaccine for COVID-19 provoked immune responses in all 45 healthy volunteers in an ongoing early-stage study in the United States. Global equities gained following on from a Wall Street rebound on Tuesday, with the optimism continuing through the Asian session, although Chinese shares sold off somewhat. European equities were set to continue the bullish trend. Hopes that European Union leaders will reach an agreement about the proposed coronavirus recovery fund at the EU summit on Friday and Saturday saw the euro rise to a four-month high of $1.14230 around 0010 GMT. German Chancellor Angela Merkel said in a news conference with Spanish Prime Minister Pedro Sanchez on Tuesday that Germany would push for a compromise. Italian Prime Minister Giuseppe Conte warned during a news conference with Merkel on Monday that the EU economic stimulus for member states should not carry too much conditionality. The euro extended gains and hit a four-month high of $1.1435 at 0744 GMT. U.S. President Donald Trump ended Hong Kong’s preferential status as a trading partner. China responded by saying it will impose retaliatory sanctions on the United States. The dollar index fell in the early hours of the morning, hitting a one-month low of 96.032. The offshore Chinese yuan hit a one-week high overnight, unaffected by the renewed Sino-U.S. tensions. The Australian and New Zealand dollars both gained around 0.3% versus the U.S. dollar, with the Aussie at 0.6999 and the Kiwi at 0.6552. The Norwegian crown gained around 0.5% against the dollar, at 9.324. Markets overlooked a downgrade in Japan GDP estimates at a policy meeting with the yen little changed, at $107.01.