- Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
- Dollar loses out as risk appetite improves
- Vaccine, Biden transition boost sentiment
- Bitcoin closes in on all-time high
The dollar nursed losses on Wednesday as progress in developing a novel coronavirus vaccine and expectations for a fiscal boost from a new U.S. government triggered a shift of funds from the greenback to riskier assets.
The U.S. currency teetered near a two-month low against the Australian dollar and a two-year low against the New Zealand dollar, both considered barometers of risk sentiment due to their close ties with the global commodities trade.
Bitcoin, a cryptocurrency known for extreme volatility, also traded near an all-time high, in a further sign that investors are growing more comfortable taking on riskier positions.
The U.S. dollar's declines are likely to continue because a vaccine and the expected choice of former Federal Reserve Chair Janet Yellen as U.S. President-elect Joe Biden's next Treasury secretary relieve two big uncertainties for investors.
"Rising yields may lend the dollar some support, but the overall direction is it will head lower," said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo.
"The trend has shifted to favour risk assets. Yellen will team up with the Fed and support the economy. U.S. rates will remain low for a long time."
The dollar stood at $1.1903 against the euro EUR=D3 on Wednesday in Asia, close to a two-week low.
The British pound GDP=D3 bought $1.3359, close to its highest in more than two months.
Against the yen JPY=D3 , the dollar held steady at 104.54. Research suggesting that a COVID-19 vaccine could be available before year end has sent U.S. stocks surging to record highs and reduced the appeal of holding the dollar as a safe-harbour currency.
Risk appetite has also improved after the outgoing U.S. President Donald Trump's administration began cooperating with the Biden transition, and after reports that Yellen, an advocate of more fiscal spending, will take the top job at Treasury.
The dollar index =USD , pitting the dollar against a basket of six major currencies, was at 92.109 after falling 0.4% on Tuesday.
The onshore yuan CNY=CFXS rose to 6.5818 per dollar on hopes for better Sino-U.S. ties under Biden. Other Asian currencies also edged higher.
The Antipodean currencies were already on the front foot as investors unwound bets for additional monetary easing in both countries.
Improving risk appetite means the Australian dollar's AUD=D3 next target is its high of $0.7413 on Sept. 1.
The New Zealand dollar NZD=D3 , which has rallied 5.6% so far this month, is trading just shy of its strongest since June 2018.
Bitcoin BTC=BTSP , the most popular cryptocurrency, eased slightly to $19,046 but was still close to its record of $19,666 from December 2017.
======================================================== Currency bid prices at 11:39AM (0239 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR=EBS $1.1903 $1.1895 +0.07% +6.17% +1.1907 +1.1888 Dollar/Yen JPY=D3 104.5400 104.4300 +0.07% -3.79% +104.5950 +104.4600 Euro/Yen EURJPY= 124.42 124.17 +0.20% +2.03% +124.4700 +124.2000 Dollar/Swiss CHF=EBS 0.9108 0.9111 -0.02% -5.86% +0.9114 +0.9106 Sterling/Dollar GBP=D3 1.3359 1.3361 +0.00% +0.74% +1.3365 +1.3356 Dollar/Canadian CAD=D3 1.2997 1.2997 +0.00% +0.05% +1.2998 +1.2991 Aussie/Dollar AUD=D3 0.7358 0.7361 -0.04% +4.87% +0.7373 +0.7354 NZ NZD=D3 0.6982 0.6979 +0.01% +3.73% +0.6984 +0.6970 Dollar/DollarAll spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX
