Dollar Experiences Painful Setback with Vaccine News

Risk sentiment rises yet again with optimistic vaccine news.

The dollar today fell to its 2018 low, translating to its lowest in two and a half years. 

The USD index, which tracks the performance of the greenback against other currencies, shed off 0.2%. It settled at 92.248.

This came after reports on the start of the inoculation came out. 

According to US officials, the start of vaccination might start in the country in three weeks’ time. 

A day after securing regulatory approval from the FDA, administration of the shot may already take place. 

With the better-than-expected movements, this is anticipated to take place even before the holiday season.

Along with this, the Fed’s playing an important role in the bleachers. Experts noted that the central bank might maintain its low-interest rates for a while, weighing the greenback further down. 

So far, since hitting a record high in March, the world’s reserve currency has gone down by a painful 11%. 

Such an event came as investors started to get stirred by vaccine optimism two weeks ago, ignited by the 95% efficacy report released by Pfizer and partner BioNTech. 

Since then, successive news from shot development from Russia and Moderna followed, raising the notch one threshold higher. 

Adding to AstraZeneca’s positive news with the University of Oxford’s drug, which already is 90% effective and can be stored without specialist refrigeration.

The news provided another hope in the market as handling and transport are one of the biggest considerations in taking calculated risks in their bets.

How Other Currencies Fared

In the latest forecast, investment firm Morgan Stanley recommends a “Sell” for the dollar and encourages traders to fluctuate unto stocks and credit.

Consequently, Goldman Sachs advises its forex traders to short the US currency against its developing nation counterparts, such as the South African rand. 

This forecast came especially now that an imperative tailwind is in place and an expected reversal in foreign exchange charts is looming.

Due to the weakening dollar, other currencies gained momentum.

In the old continent, the EUR/USD pair hiked by 0.1% and settled at 1.1870. Similarly, the pound followed the upward trend after adding 0.4% to $1.3349.

The sterling has gained momentum since last week with the improving situation on the post-Brexit trade deal.

The GBP is forecasted to hit above $1.40 against the greenback by next year.

In Asia, the USD/JPY pair fell by 0.1% to 103.81, while the Aussie rose by 0.2% and steadied at 0.7317.