Chinese Yuan and Aussie Soared Monday. What about Dollar?

Riskier currencies fluctuated on Monday as the global equities rally paused. During November, China’s manufacturing increased at its fastest pace in more than three years. According to new data, the services sector’s growth also skyrocketed to a three-year high.

Joe Biden’s U.S. election win, along with a series of positive COVID-19 vaccine announcements and hopes for further stimulus caused the global market to rally this month. Consequently, the U.S. dollar fell, and riskier currencies strengthened.

The offshore Chinese yuan was on course for its biggest monthly gains in six years. China’s economic recovery from Covid-19, along with steady capital inflows boosted the currency. On Monday, it soared slightly at 6.5694 versus the dollar.

The New Zealand dollar was set for its biggest monthly gain since 2013. It climbed up by 0.1% at 0.7042 per U.S. dollar on Monday, after hitting a new two-year high overnight.

Derek Halpenny, the EMEA head of research for global markets at MUFG, stated that the equity market performances have been very significant from a risk perspective. That has been the main factor in recycling out of greenbacks into non-dollar assets, along with positioning for a more sustained pick-up in global growth. However, he added that he wouldn’t expect the same in December. The scale of risk-on is unsustainable.

Moderna’s new successful vaccine trials improved sentiment

On Monday, the dollar plunged to its lowest level in two and a half years. The U.S. currency was set for its biggest monthly loss versus a basket of currencies since July, after tumbling down by 2.5% from its value in November. It traded at 91.625 at last, lower by 0.1% on the day.

The U.S. based drugmaker Moderna announced that it plans to apply for emergency authorization of its coronavirus vaccine in Europe, as well as in the United States. The company’s statement was based on full results from a late-stage study. It showed that Moderna’s vaccine was 94.1% effective with no serious safety concerns.

In Europe, the euro hit new three-month highs of $1.19905. Traders are looking out for the key $1.20 level. The European Central Bank hinted earlier it was carefully observing the euro-dollar exchange rate.

However, MUFG’s Halpenny stated that the $1.20 level isn’t likely to concern the ECB, considering the trade-weighted euro index is steadier. That indicates the move is dollar-driven.

Traders stay focused on Brexit negotiations. So far, the pound remains steady versus the euro at 89.80 pence per euro.