Hopes of a New Vaccine Pushes the Dollar to a One-Month Low

On Wednesday, the currency markets saw a revival of the risk sentiment as the steady progress towards the COVID-19 vaccine helped to strengthen the commodity currencies and the rebound of the equities. All these developments have pushed the dollar to a one-month low.

Since June, the dollar index fell below 96 for the first time, thereby dropping to a one-month low of 95.770. However, it managed to recover some of the losses in the afternoon trade finishing at 96.070 finally.

Moderna, a US Based company, has produced a COVID-19 vaccine on an experimental basis, and it induced immune responses from all 45 volunteers. However, there is still some space for caution as the US-China relations have worsened, and there are hidden fears about a possible economic impact of the 2nd wave of Coronavirus vaccine in the US. Florida, the new epicenter of this deadly pandemic, has reported more than 100 further fatalities that bring the total death toll over 4500.

The Canadian dollar was 0.73% stronger, and the NZD was up by 0.46% among the riskier currencies linked to commodities. The USD’s present weakened situation was attributed to the risk-on backdrop that saw the stocks head higher, prompting undoing the safe-haven USD positions. The sudden surge in risk-taking was due to the news that Moderna’s experimental vaccine has a lot of promise.

The Euro has risen to a 4-month high of $1.145 vs. the dollar and is very close to a peak of $1.150 that was achieved in the early part of March. The currency got a boost by the unique combination of the dollar’s weakness and the hope that the EU leaders will finally reach an agreement about the Coronavirus Recovery Fund.