Wed. Nov 30th, 2022

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Dollar disdained due to vaccine hopes lift risk appetite

1 min read

The dollar nursed losses against major currencies on Tuesday after encouraging results from the trial of a vaccine for COVID-19 improved sentiment in a boost to riskier assets.

The euro held onto hefty gains against the Swiss franc and the dollar following a proposal by France and Germany for a 500 billion euro ($543 billion) recovery fund offering grants to regions hit hardest by the coronavirus crisis.

Currencies linked to commodities and other riskier assets were broadly supported, helped also by a sharp rebound in oil prices as investors’ focus turned to recovery from the pandemic.

“There has been a big improvement in risk sentiment because of hopes for a vaccine,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

“Volatility is falling for stocks and dollar-funding costs are lower. It’s easy for the dollar to fall and for other currencies to ride the dollar’s losses higher.”

Wall Street shares, emerging market assets, and commodities all rallied after encouraging data from a COVID-19 vaccine trial by U.S. drugmaker Moderna added to the optimism as more governments scale back lockdown restrictions.

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