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Dollar steadies but concerns about coronavirus and Biden transition loom

CoronavirusNov 17, 2020 12:00AM ET
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© Reuters. FILE PHOTO: A U.S. Dollar banknote

By Stanley White

TOKYO (Reuters) - The dollar steadied against most currencies on Tuesday as a return of coronavirus restrictions in some U.S. states and worries about a smooth transition for President-elect Joe Biden offset optimism about a coronavirus vaccine.

The British pound edged higher on media reports the UK could reach a post-Brexit trade agreement with the European Union by early next week.

Moderna (O:MRNA) became the second U.S. pharmaceutical company in a week to report positive results from trials of a COVID-19 vaccine, considered necessary to eradicate the pandemic.

Last week, encouraging progress in coronavirus vaccine testing helped the dollar rise against the safe-harbour yen and the Swiss franc.

However, reaction in the currency market to subsequent developments has been subdued as the United States struggles to contain a second wave of infections, and with vaccine distribution not expected any time soon.

There is also some uncertainty about Biden's plans to tackle the coronavirus and stimulate the economy as the Trump administration resists cooperation with Biden's transition team.

"The market reaction has been limited because it will take time to distribute the vaccine, and there is uncertainty about U.S. politics," said Masafumi Yamamoto, chief foreign exchange strategist at Mizuho Securities in Tokyo.

"Unless we clear that hurdle, the dollar won't rise. The dollar looks particularly weak against the yuan."

The dollar was quoted at $1.1858 per euro (EUR=D3), on course for its fourth straight session of declines.

Sterling edged up to $1.3221 and also gained to 89.71 pence per euro (EURGBP=D3).

The greenback held steady at 104.52 yen

Investors in the dollar are looking ahead to the release of U.S. retail sales and industrial production later on Tuesday to gauge the health of the economic recovery.

However, policymakers' response to a record number of coronavirus cases, hospitalisations, and deaths in several U.S. states is likely to remain of greater concern.

The dollar index (=USD) against a basket of major currencies stood at 92.503, close to a one-week low.

New infections are also increasing in Britain, Europe, and Japan, which further clouds the economic outlook.

The Australian dollar held onto overnight gains against the greenback, while the New Zealand dollar hit its strongest in more than a year as investors scaled back bets for additional interest rate cuts.

Minutes from the Reserve Bank of Australia's most recent policy meeting showed the central bank was ready to provide yet more policy stimulus if needed after cutting rates to record lows.

The onshore yuan edged up to 6.5678 per dollar, approaching a 28-month high set last week, as positive economic data continues to support the currency.

Dollar steadies but concerns about coronavirus and Biden transition loom
 

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Comments (6)
hlaing myowin
hlaing myowin Nov 17, 2020 6:13AM ET
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yes Dollar is going Down
Franklin Stein
Franklin Stein Nov 17, 2020 2:16AM ET
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Gold has been responding only to a stronger DXY (by going further down). This is a symptom of sector rotation that is counter intuitive and self extinguishing.
Rich Mond
Rich Mond Nov 17, 2020 1:59AM ET
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the greenback needs to keep falling against,any retracement is just a false swing
Franklin Stein
Franklin Stein Nov 17, 2020 1:48AM ET
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When the media mafia bangs the bongo drums with sledge hammers then the pump and dump cycle is being given a wake up earful to make it fall out of its bed. The time to sacrifice more of your money to the omnipotent market gods is once again thrust upon us.
David Acevedo
David Acevedo Nov 17, 2020 1:12AM ET
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Media mafia for sure.
Adnan Qaiser
Adnan Qaiser Nov 16, 2020 11:01PM ET
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Safe Ourselves Vaccine News Just Announcement Long Procedure to Available Minimum 6 Months we should stop listening Bias Stock exchange & Media Mafia Spread fake info to sell high rates later buy at low rates ,
 
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