Yen pressured as vaccine hopes boost risk appetite
The yen scraped back some losses against the U.S. dollar on Tuesday, after the safe currency took a drubbing on news of the development of a coronavirus vaccine which raised optimism of a global economic recovery.
U.S. drugmaker Pfizer Inc and German partner BioNTech SE said a large-scale clinical trial showed their vaccine was more than 90% effective in preventing Covid-19.
The yen edged higher to 105.07 against the dollar, after suffering its biggest loss overnight since March. It fetched 76.42 against the Australian dollar, having lost more than 2% overnight.
Some analysts said markets over-reacted to the news because questions about the vaccine remain, such as how effective the vaccine is by ethnicity or age and how long immunity may last.
The Australian dollar steadied at $0.7275 against its U.S. counterpart after touching a seven-week high on Monday.
The euro stood little changed at 1.1819, having fallen more than 0.4% overnight.
The prospects of a Biden presidency has boosted risk sentiment as many believe it could boost international trade relations and maintain an easy monetary policy.
Still, incumbent Donald Trump has made no sign of conceding and his campaign is planning a series of rallies to build support for legal fights challenging the election results.
U.S. Senate Majority Leader Mitch McConnell on Monday said President Donald Trump was completely within his rights to look into “irregularities” from the election.
Against a basket of currencies, the dollar held steady at 92.75, slightly above Monday’s 10-week trough of 92.12.
10-year Treasury yield hovers near its highest level since March
U.S. Treasury yields held steady on Tuesday as the selling pressures sparked by by the hopeful news of an effective coronavirus vaccine eased.
The yield on the benchmark 10-year Treasury note was flat at 0.96%. The 30-year bond rate dipped slightly to 1.745%.
The benchmark yield rate reached 0.975% on Monday, its highest point since March 20, following news that a vaccine developed by Pfizer and BioNTech is proven to be more than 90% effective in preventing Covid-19 among those without evidence of prior infection.
UBS expects Chinese yuan to touch 6.30 per dollar over the next 12 months
The U.S. dollar is expected to continue to weaken on the back of stronger global growth, says Wayne Gordon of UBS Global Wealth Management.
Reference: CNBC
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