Dollar Weakens on Vaccine

FxPremiere.com Forex Signals | The dollar weakened in early European trade Monday, with optimism over a potential early rollout of Covid-19 vaccines prompting demand for riskier assets.

At 3:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.2% at 92.248, just above the month’s low of 92.129.

EUR/USD climbed 0.1% to 1.1870, USD/JPY fell 0.1% to 103.81, while the risk sensitive AUD/USD rose 0.2% to 0.7317.

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Promising news on vaccines have been weighing on the safe-haven dollar over the last week. This continued on Sunday, when the chief scientific adviser for “Operation Warp Speed” Moncef Slaoui said the U.S. Food and Drug Administration could grant approval of Pfizer’s candidate in mid-December, with the first people in the United States potentially receiving a vaccine the day after.

Dollar loses out on growing optimism about virus vaccine

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Key forward-looking U.S. manufacturing and services PMI data will be in focus later in the session to try and gauge the extent of the economic hit from the restrictions caused by the latest Covid-19 outbreak.

Dollar Weakens Risk Sentiment

Elsewhere, GBP/USD rose 0.4% to 1.3329, helped by the AstraZeneca vaccine news. Addiitionally, U.K. Chancellor of the Exchequer Rishi Sunak said Sunday that he is optimistic that a Brexit trade agreement with the European Union will be reached soon.

Dollar Weakens

Still, even if the UK-EU trade deal is reached, “the lack of risk premia priced into GBP suggests only a limited upside,” said analysts at ING, in a research note.

Forex – Dollar Weakens as Risk

“However, with politics and the U.K.-EU relationship uncertainty taking a less prominent role next year, this should allow GBP to benefit from the weak USD dynamics, sending GBP/USD above 1.40 in 2021.”

Dollar Weakens Ahead of Sterling

The pound was also edging higher against the euro, testing the five-month high it notched earlier this month.

Dollar Weakens on Vaccine