22/ 11/ 2020

Week Ahead | Dollar Steadies on Anticipation of Vaccine Vs. Virus Battle

The dollar rose against major currencies on Friday such as the euro and yen, with traders consolidating positions amid competing forces that pull the currency in different directions: the surge in virus cases, on the one hand, and positive vaccine news, on the other. The possible resumption of U.S. stimulus talks for COVID-19 relief has also weighed on the dollar as a safe haven. Republican and Democratic senators agreed on Thursday to revive those discussions

Overall, the greenback ended the week on a loss against a currency basket. The week started off on a negative note for the dollar with positive news on a vaccine for COVID-19, but the market has since moved back and forth between focusing on coronavirus cases and the virus drug. “We think we are in the early stages of a recovery in the global economy and trade from the shock of the pandemic and this will further” weigh on the dollar and support the euro stated by a Senior Analyst in Wall Street.U.S. Treasury Secretary Steven Mnuchin, meanwhile, defended on Friday his decision to end several of the Federal Reserve’s key pandemic lending programs on Dec. 31, saying Congress should use the money to help small U.S. companies with grants instead.

It’s a particularly busy week ahead. Brexit, COVID-19, U.S politics, and a hectic economic calendar will keep the markets busy.

19/ 11/ 2020

COVID-19 Vaccine and the EU Summit to Drive the Market

The dollar was up on Thursday morning in Asia, clawing back gains from earlier losses. The market saw small moves as the number of COVID-19 cases globally continues to rise incessantly, and expectations of further monetary stimulus from the U.S. Federal Reserve begin to grow. Central bankers continue to offer promises of almost endlessly easy money. That, when U.S. COVID-19 infection rates are causing enough concern about growth prospects to offset vaccine news, has kept the dollar on the back foot, even as equities soften. 

Looking ahead of the day, the lack of stats will leave the EUR in the hands of COVID-19 news updates and post Brexit deal negotiation progress. Both the Pound and the EUR have stood their ground until now and expected to go higher in the coming weeks. Today’s EU Summit, not only puts the Pound in the spotlight, however, disagreements over the EU budget and Recovery Fund has also resurfaced. This is expected to be another hot topic at the Summit. On the monetary policy front, ECB President Lagarde is due to speak later today. Any chatter on monetary policy will be the main focus for market participants. The big question will be whether the ECB will hold back following positive news from both Pfizer Inc. and Moderna Inc. on COVID-19 vaccine trials. Until now, Lagarde as suggested that the ECB will deliver.

18/ 11/ 2020

Brexit and Inflation Figures Put the Pound in the Spotlight

The dollar steadied against most currencies on Tuesday as a return of coronavirus restrictions in some U.S. states and worries about a smooth transition for President-elect Joe Biden offset optimism about a coronavirus vaccine and the dollar index against a basket of major currencies stood at 92.431, it’s lowest in over a week. The euro climbed against the dollar as it was boosted on optimism over another coronavirus vaccine. Drugmaker Moderna became the second U.S. pharmaceutical company in a week to report positive results from trials of a COVID-19 vaccine.

A probable Brexit deal caused the Cable to appreciate against the dollar yesterday as trader’s awaited news on the progress of trade talks between Britain and the European Union. Britain’s chief negotiator David Frost has told Prime Minister Boris Johnson to expect a Brussels trade deal  early next week , with a possible landing zone as soon as next Tuesday. That had followed news last week that Dominic Cummings, one of the political architects of the Brexit project was set to leave the government, leading some observers to predict a greater chance of a deal. 

Looking ahead, a quiet economic calendar leaves Brexit, COVID-19, and any updates on the U.S stimulus package in focus.

17/ 11/ 2020

Vaccine Optimism with Brexit and U.S Economic Data in Focus

It was a bullish start to the week for the European majors on Monday.  Concerns over the economic outlook amidst the 2nd wave of the COVID-19 pandemic took a back seat once more. Following Pfizer’s impressive results from last week, Moderna Inc.’s anticipated clinical trial results came out on Monday. The results were even more impressive than those of Pfizer Inc. and BioNTech. Moderna Inc. reported an efficacy rate of 94.5%, with trials including more severe cases. Additionally, Moderna Inc. reported that the virus could be transported at much higher temperatures than Pfizer Inc. and BioNTech’s.

Economic data took a backseat, with the hopes of an end to the global COVID-19 pandemic lifted as a result of the latest results.

It’s was a quiet start to the day on the economic calendar. There were no material stats to provide the majors with direction early in the session. The lack of stats left the markets to respond to moves across the European and U.S sessions and the latest COVID-19 vaccine news.