EUR/USD traded largely flat at 1.2060, having gained 0.5% Thursday, USD/JPY rose 0.1% to 109.16, the risk-sensitive AUD/USD fell 0.2% to 0.7766, while USD/CAD rose 0.2% to 1.2176, having fallen to a 3-1/2-year low of 1.2145 overnight, helped by the Bank of Canada's recent tapering of its asset purchases and its shift to more hawkish guidance. Elsewhere, GBP/USD rose 0.1% to 1.3902, with sterling struggling to post any serious gains despite the Bank of England slowing the pace of its bond-purchasing program at its meeting Thursday.
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The bounce was partly sparked by comments from U.S. Treasury Secretary Janet Yellen that rate hikes may be needed to stop the economy overheating. Yellen later downplayed their importance, but even the slightest mention of U.S. tightening has an outsized impact in markets that have become so dependent on monetary stimulus.
"If sustained, this could suggest today's session may be important for near-term direction, particularly if EURUSD managed to close below the key $1.20 pivot," said Ned Rumpeltin, European head of FX strategy at TD Securities. The bounce was partly sparked by comments from U.S. Treasury Secretary Janet Yellen that rate hikes may be needed to stop the economy overheating. Yellen later downplayed their importance, but even the slightest mention of U.S. tightening has an outsized impact in markets that have become so dependent on monetary stimulus.
Euro gained against the Great British Pound and the US Dollar today as German ZEW Economic Sentiment and European ZEW Economic Sentiment data were very positive, despite the prolongation of restrictions in Europe until mid-February.
At 3:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.2% at 92.597. EUR/USD climbed 0.1% to 1.1848, USD/JPY fell 0.1% to 104.53, while the risk sensitive AUD/USD rose 0.3% to 0.7287.
Trump once again shook the market with his Friday Tweet regarding the Stimulus bill where he wanted the deal to be completed ASAP, as a result, Gold and other commodities surged while the US Dollar Index plummeted.
News that AstraZeneca (NYSE:AZN) has resumed late-stage trials of its Covid-19 vaccine candidate, coupled with Pfizer (NYSE:PFE) CEO Albert Bourla saying its candidate has a “good chance” of submitting key data from late-stage trials by the end of October, has created a more positive attitude to risk, hitting the dollar. “Despite its profound fall in the past few days, we expect the pressure on GBP to continue building ... as until-recently complacent investors adjust to the new reality of a heightened no-deal Brexit risk and start/continue building GBP shorts,” ING added.
At 2:50 AM ET (0650 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.2% at 93.090, with EUR/USD up 0.2% at 1.1829. The euro has pushed higher, helped by Bloomberg News reporting that ECB officials are growing more confident in the bloc's economic outlook. With this in mind, traders will be following this ECB meeting closely.
The dollar gained in early European trade Wednesday, with the sharp selloff in U.S. equity markets prompting traders to ditch riskier currencies in favor of the world's reserve currency. "The tech selloff has caught the market by surprise and it is a bit jittery as to whether there are broader implications," said Bank of Singapore currency analyst Moh Siong Sim, in a Reuters report. EUR/USD slipped 0.1% to 1.1768, continuing to retreat from the 1.20 level it briefly touched last week before European Central Bank chief economist Philip Lane’s comments that the exchange rate mattered to monetary policy.
GBP continues to drop as UK aims to close the deal by October 15, though EU doesn’t want to accept trade deals. Boris Johnson said that London is ready for trade relations with the European Union in accordance with WTO norms, if the parties fail to come to an agreement that would suit the British side.
The dollar has strengthened in early European trade Monday, with investors seeking out this safe haven after the Covid-19 outbreak forced the biggest reversal of U.S. economic reopening to date and the U.S. and China squared off over territorial disputes in the South China Sea. The number of Covid-19 cases globally has now passed the 13 million mark, according to Johns Hopkins University data, jumping by one million cases over the last five days. This has resulted in demand for the dollar as hopes of a quick economic recovery fall, with some countries, including the U.S., re-imposing lockdown measures to curb the spread of the virus.