The dollar was down on Tuesday morning in Asia over Monday’s news that a COVID-19 vaccine could become available relatively soon and raising optimism over the global economic recovery.
The U.S. Dollar Index, which tracks the greenback against a basket of other currencies, was down 0.22% to 92.632 by 10:23 PM ET (2:23 AM GMT).
U.S. drugmaker Pfizer Inc (NYSE:PFE) said on Monday that its vaccine candidate, which is being developed in partnership with Germany’s BioNTech (NASDAQ:BNTX), was more than 90% effective in preventing COVID-19. The claim was based on data from the first 94 people in a large-scale clinical trial to be infected with the virus.
Coming as the number of global COVID-19 cases surpassed the 50.8 million mark on Nov. 10, with over 10 million cases in the U.S. alone, according to data from Johns Hopkins University, the news increased hopes that a COVID-19 cure would become available soon.
However, some investors cautioned against popping the champagne too soon, with questions about the vaccine’s efficacy and the length of immunity provided still to be answered.
“Perhaps the market did over-react to the vaccine, given there’s still some way to go prove that it’s safe. What they’ve shown is that it’s reasonably effective, safety is another stage. Once the market looked into the finer print of what these results were, maybe they backed off the trade a bit,” Westpac currency analyst Imre Speizer told Reuters.
The USD/JPY pair was down 0.44% to 104.90. The safe-haven Japanese yen clawed back some of its losses against the greenback, after seeing its biggest loss since March during the previous session.
“What’s important about the overnight movement is that it overturned the current trend of the U.S. dollar falling, instead of the yen, when the market turns risk-on. The yuan and euro have been rising against the dollar as equities jumped on Joe Biden’s election win … but the overnight movement flipped things back to the way it is when markets usually turn risk-on, U.S. Treasury yields rise and the yen depreciates more than the dollar,” Mizuho Securities chief currency strategist Masafumi Yamamoto told Reuters.
The USD/CNY pair edged down 0.19% to 6.6157. Data released earlier in the day showed that October’s Consumer Price Index (CPI) and the Producer Price Index both saw smaller-than-expected growth year-on-year, and the CPI also saw smaller-than-expected growth month-on-month.
On the vaccines front, Sinovac Biotech Ltd (NASDAQ:SVA) has halted its final stage trial in Brazil for its vaccine candidate Coronavac due to a serious adverse event that occurred on Oct. 29.
The AUD/USD pair inched down 0.03% to 0.7283. Across the Tasman Sea, the NZD/USD pair was up 0.26% to 0.6835, with the Reserve Bank of New Zealand scheduled to meet on Wednesday.
The GBP/USD pair edged up 0.19% to 1.3188.
Meanwhile, President-elect Joe Biden continues to face challenges from incumbent Donald Trump, who shows no signs of conceding. Trump is also planning rallies to boost support for his legal challenges to the presidential election results.
Trump is completely within his rights to look into “irregularities” from the election, Senate Majority Leader Mitch McConnell said on Monday.
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