The forex market fluctuated on Tuesday. Riskier currencies rallied as the hopes for a COVID-19 vaccine bolstered sentiment. British drugmaker AstraZeneca restarted its vaccine trial in Britain last week. But it is still on hold in the United States thus far.
The euro climbed up by 0.2% versus the dollar at $1.1891. However, the pound changed insignificantly. The Canadian dollar gained 0.2%, and the Swedish crown added 0.1%, but the Norwegian crown plummeted down by almost 0.3% as oil prices continued to fall.
Meanwhile, the Australian dollar soared to 0.7323, rising by 0.5% on Tuesday. The country’s central bank meeting showed no signs of a further cut to record-low interest rates. As a result, the Aussie strengthened significantly. The New Zealand dollar also jumped by 0.3% versus the U.S. dollar.
On the other hand, the U.S. dollar dropped down, but it reclaimed some of its overnight losses in early London trade. Traders were waiting for U.S. industrial production data that was due on Tuesday. The Federal Reserve’s two-day policy meeting is starting on Wednesday as well. Meanwhile, the dollar index ended lower by 0.1% yesterday.
Despite that, ING strategists think that another good August industrial production figure should maintain a positive mood. But the dollar index may still drop to 92.50.
How did the Chinese Yuan fare?
The yuan rallied in offshore and onshore trading on Tuesday. The offshore yuan skyrocketed to 6.7725 versus the dollar before declining insignificantly. Still, the Chinese currency hit its highest point in 16 months against the greenback yesterday.
According to reports, China’s industrial output accelerated, and retail sales grew for the first time this year, beating analysts’ forecasts. The data pointed at economic recovery after the Covid-19 pandemic shutdowns, causing the yuan’s rally.
The latest monthly activity data shows that positive cyclical momentum in China could be sustained through the rest of the year – stated Lee Hardman, the currency analyst at MUFG. He thinks that the data was a supportive development for Asian and commodity-related currencies.