Market Overview

Dollar slides to two-and-half-year low on vaccine, stimulus optimism

The dollar slid to a 2-1/2-year low against a basket of major currencies on Thursday as investors wagered that more economic stimulus from Washington and the expected start of COVID-19 vaccinations would support riskier assets. While U.S. legislators have failed to reach agreement on fresh relief for a pandemic-hit U.S. economy, there were early signs that a $908 billion bipartisan proposal could be gaining traction.

Investors expect lawmakers to reach a deal eventually with the two parties also facing a Dec. 11 deadline to pass a $1.4 trillion budget or risk a shutdown of the government. Britain on Wednesday approved a COVID-19 vaccine developed by Pfizer and BioNTech and said it would start vaccinating those most at risk early next week. “Britain is starting vaccination and the U.S. is also expected to do so in coming weeks while coronavirus infections appeared to have peaked in Europe and the same could be said for the U.S. as well,” said Yujiro Goto, chief strategist at Nomura Securities. “All of these are easing worries about the economic recovery losing steam.”

That optimism more than offset disappointing U.S. jobs numbers for November and helped boost the euro despite widespread expectations the European Central Bank will enhance its quantitative easing next week. The common currency ticked up slightly to $1.2119, touching its loftiest level since late April 2018. The dollar index slipped to 2 1/2-year low of 90.948 and last stood at 90.992.

Dollar slides to two-and-half-year low on vaccine, stimulus optimism, Reuters, Dec 3

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