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Weekly Roundup: US dollar slips as vaccine hopes buoy market optimism

currency-newsWeekly Roundup: US dollar slips as vaccine hopes buoy market optimism
The US dollar fell back again last week as demand for the safe-haven currency was undermined by improving market sentiment.

This was largely attributed to positive headlines regarding a potential coronavirus vaccine as early results from human trials in the US were shown to have triggered immune responses.

Media reports bolstered hopes that a vaccine could be approved by the end of 2020 and could aid in a V-shaped recovery in global growth.

Resulting risk-on trade saw investors shun the US dollar, in spite of the US consumer price index reporting stronger-than-expected inflation in June.

The USD sell-off then persisted in midweek trade, with robust US industrial production figures also failing to shield the US dollar against further losses as investors continued to gravitate toward high-yield assets in upbeat trade.

However, as US-China tensions began to flare up again in the second half of the week, souring risk sentiment prompted jittery investors to seek the safety of the ‘Greenback’, tempering losses.

Turning to this week, it looks to be another slow start for the US dollar as EU leaders reach an agreement on the EU’s coronavirus recovery fund, which is helping to cheer market sentiment.

Investors are also keeping an eye out for the potential for more US fiscal support as current measures are set to expire at the end of July.

With US coronavirus cases reaching record highs over the past week and many states reversing their reopening plans, a second stimulus package looks to be top of the agenda for the White House.

Meanwhile, on the data front, things are looking quiet this week. A strong rebound in existing home sales last month may offer some modest support on Wednesday, but it’s likely to be Friday’s PMI figures which offer the most direction for the US dollar.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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