The U.S. dollar reportedly strengthened again after some time ago falling. Meanwhile, the safe-haven yen weakened in the previous session as the market continued to adjust to higher interest rates. It was also affected by the economic growth outlook following the news on Monday.
The news is about encouraging results for the coronavirus vaccine. As it is known that there is one brand that is clinically proven to be effective for overcoming the virus. Its effectiveness rate even reaches 90% and has no serious safety problems.
The euro reportedly fell to its lowest level against the dollar this week as U.S. bond yields rose compared with European bonds. The New Zealand dollar jumped to its strongest level in a year and a half. Traders are reducing bets that the central bank.
Movements Occurring in the USD
The USD has now started to move up by having advantage inequities in the transition from safe-haven status during the COVID-19 crisis. This situation occurs when the currency tends to move in the opposite direction. That was conveyed by Erik Nelson, the macro strategist at Wells Fargo Securities.
It is a huge change from what can be seen over the last few months. The rise seen in U.S. yields could be a very important point of change to know that the equity-dollar relationship is evolving. This is what attracts market participants.
When you look at real or nominal returns, this condition will make many people more interested in owning USD. As a result of the note, the 10-year U.S. Treasury rose to 0.972% on Wednesday. The data also showed an increase of 0.82% on Friday.
The dollar rose as much as 0.5% on Wednesday against major currencies in the market. This comes after a flat day on Tuesday and a 0.5% rise on Monday. It can be seen that indeed this currency showed its instability some time ago.
Many People Are Still Cautious
Tuesday's pause in dollar movements shows continued restraint and caution. It is especially about how safe and beneficial the new vaccine is. People still wonder about when this thing can start to be used. Cases of the coronavirus are increasing daily in the US and Europe.
People must know the detail of that vaccine and know the right approach. The news is undoubtedly very positive, but of course, everyone needs to learn the details first and think about the consequences of the whole process. It is an important thing to prove.
That was conveyed by Jeremy Stretch, the chief G10 FX strategist at CIBC Capital Markets. We all need to remember that this is an unproven vaccine in terms of certification. Although it has shown good results in the meantime, it still requires a long process.
Gold Slips as Much as 1%
It is known that the Euro fell as much as 0.5% today to $1.175 against the dollar. The USD reported a 0.3% rise to 105.59 versus the Japanese yen. Other currencies also experience movements accompanying the strengthening of those owned by either one of these major currencies.
The price of gold fell as much as 1% on Wednesday as the dollar weakened. However, there is optimism around the potential covid-19 vaccine raising hopes for a rapid economic recovery. This situation pushes investors towards riskier assets in the global market.
According to the data, the spot of gold fell 0.9% to $1,860.61 an ounce. U.S. gold futures also fell as much as 0.9% to $1,859.60. In this case, gold has two opposites, strong equities, and a strong dollar at the moment.
It is difficult for the metal to continue to rally as both markets climb higher. Weakening the appeal of gold, the USD index rose 0.4 percent to a nearly one-week high, making gold more expensive for holders of other currencies.
