Dollar Up While Worries in Covid-19 Development Remain 

  • 13
    November, 2020

     

    On Friday morning in Asia session, the dollar edged higher towards its best week against the yen since March. 

    Although, hopes of a Covid-19 vaccine continued to waver investors sentiment and a second wave of Covid-19 cases in Europe and U.S. meant that most investors will start seeking out safe-haven currencies. 

    Ahead of the weekend, investors had a positive news on the vaccine front, with Pfizer Inc and BioNTech announcing positive results for their candidate BNT-162b2 on Monday. 

    Meanwhile in Russia, Sputnik V vaccine candidate showed 92% efficacy on Wednesday.  Moderna Inc said that the accumulation of data for a first analysis of its vaccine Mrna-1273 is complete, with an announcement on the vaccine’s efficacy expected by the end of the month. 

    However, there are logistical issues in mass-producing and transporting the vaccines. The increasing number of Covid-19 cases in Europe and U.S.A. makes it hard for the vaccines to be transported due to re-imposing of lockdowns. 

    The fears that these vaccines not distributed in time outweighs any positive development in Eurozone industrial production number, due later in the day. 

    “There are reasons to be optimistic about the global economic recovery, and eventual pandemic submission over the coming year, but we are not out of the woods yet,” National Australia Bank’s senior currency strategist Rodrigo Catril told Reuters. 

    The U.S. Dollar index inched up 0.01% to 92.968 by 9:58 PM ET (1:58 AM GMT) 

    The USD/JPY pair edged lower to 0.19% to 104. 92. 

    The AUD/USD pair inched down 0.08% to 0.7226, as “the AUD continues to find the air thinning above 73 cents,” according to Catril 

    The USD/CNY pair edged up 0.18% to 6.6236. 

    The GBP/USD pair inched up 0.03% to 1.3118. 

    In Europe, the central bank said a warning that the pandemic is far from over even though vaccines are in sight. 

    “From a huge river of uncertainty, we see the other side now,” ECB President Christine Legarde said in a panel discussion alongside U.S. Federal Reserve Chair Jerome Powell and Bank of England Governor Andrew Bailey. 

    “But I don’t want to be exuberant about this vaccination because there is still uncertainty” over its production and distribution, Legarde was quick to add. 

     

    Technical Outlook 

      

    In the daily charts of GBP/USD, the pair edged up early Friday morning in the Sydney session.  

    As what we can see in the chart, the pair edged lower yesterday completely breaking down from the support level at 1.31966. Despite the uncertainty in the US dollar, the pound is falling further due to Brexit hopes wavering and sentiment from the vaccines. 

    The price may continue to head on lower until next week and will re-test the support level at 1.28685. However, if the price will continue to surge up and breakout from the resistance level at 1.31966, we can expect the pair to edged up and test the resistance level at 1.34872. 

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