Yen on slippery ground as Yellen, Trump transition news boost risk appetite
The yen was on the back foot while riskier currencies were supported on Tuesday on rising optimism following news U.S. President-elect Joe Biden is expected to tap former Federal Reserve Chair Janet Yellen as U.S. Treasury Secretary.
Also underpinning the risk-on mood, President Donald Trump gave the head of the General Services Administration the go-ahead to proceed with a transition for Biden’s administration despite plans to continue with legal challenges.
Yellen has called for increased government spending to boost the U.S. economy out of a deep recession brought on by the coronavirus and has frequently cited growing economic inequality in the United States as a threat to America’s values and its future.
The safe-haven yen traded at 104.49 per dollar, having slipped about 0.6% overnight.
The U.S. dollar, which tends to weaken against riskier, less liquid currencies on positive market sentiment, also flirted near 12-week lows, though it has managed to find some technical support.
The dollar’s index recovered a touch to 92.530 after dropping to 92.013 on Monday, the lowest since Sept. 1. A conclusive break on the dollar index below support at around 92 could bring about a fresh downturn, analysts said.
The U.S. currency’s safe-haven appeal was also dented after AstraZeneca said on Monday that its COVID-19 vaccine could be about 90% effective and it would prepare to submit data to authorities around the world that have a framework for conditional or early approval.
The euro was flat at $1.18395, lacking momentum to clear a hurdle at $1.19.
The British pound held firm near a 12-week high against the dollar and six-month high versus the euro, propped up by bets Britain and the European Union would clinch a Brexit trade deal.
London and Brussels this week continue their negotiations to agree a deal on their future trading relationship, though time is now running very short as Britain’s post-Brexit transition period ends in fewer than six weeks.
The pound stood at $1.3330, having hit a high of $1.3396 on Monday. Against the euro, it traded at 0.8887 to the euro, near its six-month high touched about two weeks ago.
Reference: Reuters
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