The U.S. dollar was reportedly slightly weaker in early European trading on Friday. However, new Covid-19 cases are continuing to emerge across Europe and the US making market participants nervous about buying risky currencies. This situation remains despite positive news about the vaccine's potential.
As it is known that there is one vaccine that is reported to be developing quite well. According to the study, the vaccine even has an effectiveness rate of as much as 90% without any reported safety disturbances. However, it still takes time and tests.
The index of USD that tracks the greenback and other 6 currencies, was down as much as 0.1% at 92.898. Meanwhile, GBP/USD rose as much as 0.3% to 1.3155. USD/JPY reported a decline of 0.1% to 105.00. Different things happen in other currencies.
The Market Participants Reaction
According to the report, the risk-sensitive AUD/USD currency pair rose 0.1% to 0.7233. Some of the above conditions indicate that in today's market conditions cannot be said to be stable. Therefore, many market participants are still cautious about this thing.
In Europe and the United States, the second wave of covid-19 infections has put the lockdown back in place. It is done to stop the wider spread of the virus. This has prompted caution in the foreign exchange market although there has been a lot of positive news during the week.
The good news is certainly about the potential of the Covid vaccine. Pfizer and BioNTech announced strong results for their vaccine candidates on Monday. So far they are the one who has confidently made a statement about their use.
Meanwhile, Moderna said it expects to announce the efficacy of its vaccine by the end of this month. The number of companies reporting this happy news is welcomed by the market. As a result, some commodities have shown a rise some time ago.
Investors Await a Response from Biden
The big risk rally has lost its power but still failed to turn it into a market correction. In the forex market, this is reflected by the cessation of the dollar's decline. This opinion was expressed by ING analyst Francesco Pesole in a research note some time ago.
The backdrop of world markets remains the contrast between vaccine-related expectations and sharply increased infections. Meanwhile, investors are still looking for more clues from American President-elect Joe Biden. There are a few key points that he must decide after his inauguration.
An example is his plan for a viral response, a fiscal stimulus deal, and foreign policy. It is known that these factors are still uncertain until now. In fact, fiscal stimulus, for example, is one of the important and anticipated decisions.
Market and Currency Updates
The EUR/USD pair rose as much as 0.1% to 1.1814. It comes ahead of the latest eurozone growth figures for the session. After the release of 'flash', it is clear that seasonally adjusted GDP increased by 12.7% in the euro area. Improvements are also in other areas.
The increase was 12.1% in the EU. That is higher when compared to the previous quarter. However, markets are likely to ignore the good news as new restriction policies carried out across the continent indicate the possibility of a double-dip recession.
The European Central Bank is widely expected to deliver and provide more stimuli at its meeting in December. On the other hand, President Christine Lagarde on Thursday warned of huge expectations on a potential vaccine announced so far. What does he think?
In terms of great uncertainty, it sees the other side now. It was conveyed by Lagarde. He does not want to overdo this vaccination because there is still uncertainty; especially regarding production and distribution. A long time is still needed for clinical trials.
