Dollar Falls as Moderna Announces a Successful Vaccine Trial

The dollar tumbled down on Tuesday as concerns arise about a smooth transition for president-elect Joe Biden. Moreover, the return of Covid-19 restrictions in several U.S. states offset optimism about a new vaccine.

On the other hand, the British pound climbed up due to reports that the U.K. may reach a post-Brexit trade agreement with the European Union by early next week.

During a week, Moderna is the second U.S. pharmaceutical company that reported positive results from trials of a coronavirus vaccine. Progress in vaccine testing boosted the dollar against the safe-haven Japanese yen and the Swiss franc last week.

Despite that, the reaction in the Forex market to subsequent developments has been subdued while the U.S. is trying to contain the second wave of infections. Unfortunately, vaccine distributions will take much more time.

Furthermore, some uncertainty remains about Biden’s plans to tackle the pandemic and stimulate the economy. In addition, the Trump administration still resists cooperation with Biden’s transition team.

Masafumi Yamamoto, the chief foreign exchange strategist at Mizuho Securities in Tokyo, stated that the market reaction had been limited as it will take time to distribute the vaccine. There is also uncertainty about U.S. politics. He added that unless they clear that hurdle, the greenback won’t rise. Additionally, the dollar looks very weak against the Chinese yuan right now.

Moderna stock skyrocketed due to successful vaccine trials

How is the U.S. dollar trading currently? 

The greenback changed hands at $1.1861 per euro on Tuesday, remaining on course for its fourth straight session of declines. The dollar was steady at 104.47 yen, though.

Meanwhile, the sterling surged forward to $1.3220. The British currency has also gained to 89.73 pence per euro.

Traders in the dollar are waiting for the release of U.S. retail sales and industrial production later on Tuesday. These reports will help them gauge the health of the economic recovery.

Nevertheless, policymakers’ response to a record number of virus cases, hospitalizations, and deaths in several U.S. states will probably remain investors’ greater concerns. New infections are surging in Europe, Britain, and Japan, as well, further clouding the economic outlook.

In Asia, the Australian dollar held onto overnight gains against the dollar. The New Zealand dollar also traded near its strongest point in more than a year as traders scaled back bets for further monetary easing.

The Reserve Bank of Australia’s most recent policy meeting showed that the bank was ready to provide more policy stimulus if needed. The central bank has already cut rates to record lows.

Investors will closely monitor the opening of the onshore Chinese yuan as well, to see if China’s currency will reach a new 28-month high.