Dollar Down, Hoping for More Fed Monetary Easing Measures

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Dollar

The dollar dropped on Tuesday morning in Asia’s forex. It’s starting the new month on a lower note, having closed its worst month since July in November. The expectation of more monetary easing measures from the Federal Reserve, however, gives the greenback a boost.

The U.S. Dollar Index Futures edged down 0.12% to 91.903 by 9:27 PM ET (1:27 AM GMT).

Promising data from COVID-19 vaccine developers has led to a shortage of dollars. It drove investors towards riskier currencies and higher-yielding assets outside the U.S.

Moderna Inc (NASDAQ:MRNA) announced that its vaccine candidate mRNA-1273  was 94.1% effective. The company plans to request clearance for it in the U.S. and Europe.

Pfizer Inc (NYSE:PFE) and BioNTech SE (F:22UAy) also await approval for its candidate vaccine BNT162b2. It will be reviewed before Moderna’s application.

The global rise in the number of COVID-19 cases has not provided much support to the dollar. People are expecting that the U.S. central bank will step in to boost the economy ahead of the vaccines.

Later in the day and on Wednesday, Fed Chairman Jerome Powell will testify before Congress. It will be ahead of the central bank’s policy meeting on Dec. 15 and 16. Investors will closely monitor both events for clues on the next moves.

Currencies Movements

The USD/JPY climbed 0.07% to 104.34.

In Antipodean currencies, the AUD/USD pair edged up 0.17% to 0.7358. The Reserve Bank of Australia (RBA) will hand down its last policy decision for 2020 later in the day. It is widely expected though, that no changes will be made. 

Across the Tasman Sea, the NZD/USD pair gained 0.08% to 0.7023. These risk currencies were reversing some of Monday’s losses. They stayed, however, just below the milestone peaks reached on Monday.

The USD/CNY pair rose 0.04% to 6.5789. The yuan was firm in offshore trade over Monday’s positive manufacturing and non-manufacturing Purchasing Managers Indexes (PMI).

The Caixin manufacturing PMI is due later in the day, while the Caixin services PMI is due in the week.

The GBP/USD pair was up 0.17% to 1.3343. Hopes to reach a Brexit deal before the end of the month boosted the pound. 

For the euro, it’s a busy day ahead on the economic calendar. Manufacturing PMIs from Italy and Spain are due. Unemployment figures from Germany are also awaited. 

Furthermore, finalized manufacturing PMIs from France, Germany, and the Eurozone are also due out.

The EUR edged up by 0.18% to $1.1949.

Elsewhere, the Kiwi Dollar climbed 0.09% to $0.7023.

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