On Monday US trading session, dollar was boosted after the IHS Markit PMI data of the US. The data showed that the US manufacturing and services sector outperformed in Nov, even under the severe coronavirus pandemic. Investors are optimistic with the better than expected business activities in the US, vaccine development, and the transition of the US government.
Stocks in Asian markets were overall up on Tuesday, while Japan stocks led gains, jumping 2.5%. Overnight, the Wall Street just edged higher, while the DOW performed better with 1.1% up. Asian stocks even react more positive on the coronavirus vaccine news.
Undoubtedly, vaccine development is encouraging recently. Last week, the test results of Pfizer-BioNTech and Moderna showed over 90% effectiveness of their vaccine. AstraZeneca, on Monday, said the interim analysis showed its vaccine has average 70% effectiveness in preventing Covid-19.
And, perhaps the most important is that, the Trump administration has begun the transition process to Biden. ZFX analyst Jacob Leung said that, it means that in medium term, the political uncertainty will be significantly lowered, driving risk appetite in the market.
Riskier currencies gained on Tuesday as investors are now rebalancing their portfolio after the rebound of the dollar. ZFX analyst Jacob Leung said that, the economic data in the US was just favorable the greenback in a very short term, based on the economic recovery prospective. However, after digesting the news all around, positive sentiment hurts the safe-haven dollar.
As the Fed will not change their monetary policies these “years”, those stronger economic figures, even in the US, in the future may not be a really good news to the dollar. Also, traders believe that the China-US tensions may ease under Biden administration, which in general, is a positive momentum to the global asset markets.
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