WASHINGTON: As fast-track plans to carry out a coronavirus vaccine in the US increased the appetite for risky assets, the dollar falls to a two-and-a-half-year low.
After US officials said vaccinations may start in less than three weeks, the Bloomberg Dollar Spot Index dropped as much as 0.2 percent to an April 2018 low. The New Zealand dollar, the pound and the Norwegian krone led Monday’s trading gains against the greenback in Asia.
“Rodrigo Catril, a currency strategist at National Australia Bank Ltd in Sydney, said The vaccine news favours the view of a sooner-rather-than-later global economic recovery, with the USD losing its safe-haven appeal along the way.
“This is a risk-positive, USD-negative background, particularly with the Fed likely for some time to remain ultra-dovish.”
As investors rejoice for the possibility of a viable vaccine and the prospect of improving global development. The dollar has dropped more than 11 percent from its record high in March.
In favour of stocks and credit, Morgan Stanley advises selling the dollar. While Goldman Sachs Group Inc prefers to shorten the US currency against peers from developed countries. Including the Mexican peso and South African rand.
“In a note, Goldman strategists including Zach Pandl wrote, “Fund flows are now showing the predicted rotation into EM FX. “With that important tailwind now in place, we would be reluctant to back away from USD shorts.”