Some Asian currencies rallied on Tuesday as risk-sentiment improved. The Australian dollar climbed up to $0.6530, close to a one-week high, and the New Zealand dollar rose by 0.25%, to $0.6054.
The Reserve Bank of New Zealand’s Deputy Governor, Geoff Bascand’s, announcement boosted the kiwi briefly. According to him, the central bank would re-evaluate its monetary easing in about three months to determine whether to do more.
Meanwhile, the Chinese yuan remained steady at 7.1090 per dollar in the onshore market. Traders are still concerned due to escalating tensions between the U.S. and China over trade policy.
The U.S. dollar climbed up against major currencies due to promising results from the trial for a vaccine for coronavirus. Wall Street shares, commodities, and emerging market assets, all hit high after U.S. drugmaker, Moderna, released encouraging data about a COVID-19 vaccine.
There had been a big improvement in risk sentiment because of the hopes for a vaccine – noted Junichi Ishikawa, the senior FX strategist at IG Securities in Tokyo. He also added that volatility in stocks is falling. As dollar-funding costs are lower, it’s easy for other currencies to push the dollar’s losses higher.
Riskier assets and currencies linked to commodities skyrocketed as the oil price surged forward over the last few days.
What about European currencies?
The pound soared against the dollar, trading at $1.2204. But the situation may change after the release of British employment data.
The Euro traded at $1.0913 on Tuesday. The currency held onto significant gains against the Swiss franc and the dollar. It stood at 1.0613 versus the Swiss franc. This is after jumping on Monday to its highest point in more than two months. The Euro also gained 0.9% against the greenback in the previous session.
France and Germany recently proposed a 500 billion euro recovery fund to offer grants to the regions hit hardest by the coronavirus. The fund will probably mostly benefit Italy and Spain.
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