The US dollar is trading lower against major currencies, allowing them to trace gains against the greenback as investors see a robust global recovery coming as the cheaper, more easily transportable AstraZeneca (AZN.L) vaccine is rolled out.
The pound rose 0.3% against the dollar (GBPUSD=X), sitting at $1.3658 at around 8.40am in London. Overnight in London, it was higher 1%.
The euro was oscillating up and down against the greenback (EURUSD=X), becoming nearly flat on Thursday morning at $1.2297. Overnight in London, it rose 0.4% to $1.2285.
Japan’s yen gained 0.1% against the dollar (JPYUSD=X), sitting at $0.0097.
A number of forces have led to the moves, including Wednesday’s announcement that Oxford-AstraZeneca’s (AZN.L) COVID-19 vaccine had been approved by the UK government, which boosted market hopes of an effective delivery method to execute mass immunisation programmes given the drug’s cheap cost and higher storage threshold than its peers — created by Pfizer (PFE)-BioNTech (BNTX) and Moderna’s (MRNA). If this holds true, exponential growth in COVID-19 case counts should start to recede, despite newer, more transmissible variants of the virus coming to the fore.
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The AstraZeneca vaccine “is potentially a game-changer for many parts of the world where approvals will surely follow quickly, said Jeffrey Halley, senior market analyst at OANDA. “That gave a boost to the global recovery trade, which should see a continued global rotation out of defensive US Dollar positioning and into recovery orientated markets.”
With rather scant US economic data at the end of the year, the greenback is also lacking some direction.
“The US economic data isn’t giving any indications that the Fed is going to move the needle on its monetary policy stance and this is pushing the dollar index lower,” said Naeem Aslam, chief market analyst at AvaTrade.
Though, Aslam added that a market correction is coming.
“The index has touched the 2.5 year low and it is important to keep in mind that the index is due for a mean reversion trade which means a move back to the upside.”
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