NEW YORK (Reuters) – The dollar was little changed on Monday after pharmaceutical firm Moderna <MRNA.O> became the second U.S. company in a week to report positive results from its COVID-19 vaccine trials.
Optimism about the vaccine lifted stocks but mostly bypassed the foreign exchange markets, where currency trading held the index of the U.S. dollar against a basket of currencies <=USD> at 92.64, just below its late Friday level at 92.74.
“For now, we may continue to see a lot of USD market churn inside of relatively narrow ranges, though longer term, with the Fed’s lower for longer policy stance, the USD may come under pressure in the coming months, as growth returns with inflation,” wrote analysts at Action Economics.
Moderna <MRNA.O> said its experimental vaccine was 94.5% effective in preventing COVID-19 based on interim data from a late-stage trial. That followed a similar vaccine-related update from Pfizer Inc <PFE.N> a week earlier.
The risk-on mood lifted U.S. stock indexes on Monday and nudged up the yield on the 10-year U.S. Treasury note <US10YT=RR>.
Despite fears of a resurgence of global cases of COVID-19, investors remain hopeful that a working vaccine could rescue the global economy, helping to fuel a rally in stock markets and a rebound in riskier currencies.
The euro <EUR=> was steady as investors began the week in a relatively upbeat mood after strong economic data from Asia. The euro hit a one-week high of $1.187 <EUR=EBS> earlier in the day and was last up 0.07% at $1.184.
Commerzbank analysts said investor confidence that the euro region was better prepared to launch more fiscal stimulus than a divided U.S. Congress was also helping.
(Graphic: U.S. dollar vs offshore Chinese yuan – https://fingfx.thomsonreuters.com/gfx/mkt/qzjvqoyybvx/yuan.PNG)
Data on Monday showed signs of economic recovery in China and Japan, the world’s second and third largest economies. In other promising news for the region, 15 Asia-Pacific countries on Sunday signed the China-backed Regional Comprehensive Economic Partnership deal, a China-backed deal that excludes the United States, which had left a rival Asia-Pacific grouping under President Donald Trump.
The dollar against the Chinese yuan was last off 0.23% <CNH=EBS> in offshore markets at 6.576, after the Chinese currency earlier in the day hit a one-week high of 6.566 yuan per dollar.
(Reporting by Kate Duguid; Editing by Sandra Maler)