After a successful COVID-19 vaccine trial, the United States dollar fell. Risks of trade fell. Thus, New Zealand and Australian dollars are up. Moreover, Norwegian, and Swedish crowns inch to 2-month highs.
On Monday, there was a Franco-German proposal for funding. It will offer grants to regions of the European Union and sectors hit harder by the pandemic of coronavirus. Thus, on Tuesday, the euro rallied.
By weakness in the dollar, the common currency also buoyed. Moreover, the greenback lost its safe-haven appeal after encouraging results from the trial of a vaccine for COVID-19. It boosted riskier assets.
France and Germany’s agreements usually pave the way for broader European Union deals. Thus, they proposed that the European Commission borrow the $550 billion (500 billion euros) on behalf of the whole European Union. The Commission will most probably outline their proposal before a European summit scheduled for the 27th of May.
After rising to a two-week high of $1.0976 earlier, the euro last bought $1.0952. On Tuesday, the cost of betting against the euro versus the dollar in currency-derivatives markets fell to the lowest since mid-March.
Lee Hardman is a currency analyst at MUFG. He said that the Franco-German proposal represents a material step forwards towards the harnessing collective fiscal capacity. Thus, it is for providing sustained fiscal stimulus for supporting the economic recovery.
There were one-month and three-month risk reversals remaining below zero. Nevertheless, traders continued to request a premium for euro put options. Thus, the implied more bearish bets on the common currency.
Vasileios Gkionakis is the global head of FX strategy at Lombard Odier. He said that he would be surprised in case investors were short the euro at current levels.
According to the latest CFTC data, speculators held $10.6 billion of euro longs. Those volumes are close to two-year highs.
It is the current news of the market today.
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