Daily Currency Update

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Déjà vu. Vaccine news.

USD - United States Dollar

Vaccine maker Moderna announced this morning that its COVID-19 vaccine was 94.5% effective, and like we saw last week, markets climbed higher when Pfizer made a similar claim.

As we’ve seen, market enthusiasm and a willingness to invest in riskier assets has pushed the US dollar down against most currencies. The US Dollar Index, which measures the strength of the USD against a basket of six major currencies, was down a tenth of a percent this morning at 92.6.

New coronavirus cases continued to escalate. Over the weekend, some US states imposed limits on businesses and everyday life, while the UK, Germany and France are in nation-wide lockdowns.

The transition to the next presidential administration has not been smooth. Over the next two months, in the build-up to President-elect Joe Biden’s inauguration, there will be uncertainty as the two administrations wrangle over policies.

Key Movers

European Central Bank President, Christine Lagarde spoke on the likely recovery of the Eurozone as “unsteady” and “stop and start”, following the distribution of the vaccine. With greater clarity in global markets, it is likely the ECB will announce further easing measures on December 10, with either a further package, quantitative easing, or least likely, a rate cut. This week we see an abundance of Eurozone data.

The pound was given a lift on Friday afternoon as news broke that Dominic Cummings, Chief Adviser to Boris Johnson, had left Downing Street with immediate effect. Cummings was a key architect in the Brexit saga. Reports suggest his absence will not slow down the negotiations. Some analysts predict a deal may be reached in the next 10 days, while others suggest the UK may seek further extension due to COVID and the desire to not disrupt vaccine distribution.

The Australian dollar had an excellent run early last week touching highs of 0.7339 on the back of the euphoria surrounding the encouraging progress in the Pfizer vaccine. Without any macroeconomic news for markets to focus on, the AUDUSD moved within a 20-pip range (0.7220 – 0.7240). As trading continued offshore, a rise in sentiment pushed the Aussie to highs of 0.7273 and finally closing the week at 0.7264. The AUDUSD opened this morning at 0.7264, and AUD is deemed to have moved into a consolidation phase.

Expected Ranges

EUR/USD: 1.181 - 1.186 ▼

GBP/USD: 1.316 - 1.323 ▼

AUD/USD: 0.726 - 0.732 ▼

USD/CAD: 1.306 - 1.314 ▼