Euro hits one-week high as vaccine hopes lift investor spirits

Shafaq News/ The dollar dropped and the euro and British pound gained on Monday, as investors began the week in an upbeat mood after strong data out of Asia and on hopes for a successful vaccine against COVID-19. According to Reuters.

Despite fears of a resurgence of global cases of COVID-19, investors remain hopeful a working vaccine could rescue the global economy, helping to fuel a rally in stock markets and a rebound in riskier currencies.

Signs that Britain and the European Union might make progress negotiating a post-Brexit trade deal also encouraged investors to take on more risk.

Against a basket of currencies, the dollar softened 0.2% to 92.573

The euro rose 0.3% to a one-week high of $1.1868 while currencies sensitive to global sentiment such as the Australian dollar notched up solid gains

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.

"In particular as the positive news about vaccine developers are providing a glimmer of hope at the end of the corona tunnel the FX market is likely to prefer an active fiscal reaction over inactivity," said Commerzbank strategist Ulrich Leuchtmann.

"If the end of the pandemic is foreseeable the tactic of pushing the European economies over lockdown with the help of fiscal policies makes sense again to FX traders."

Sterling rallied to as high as $1.3242 before settling at $1.3219, up 0.1%. Against the euro the pound was down marginally at 89.75 pence.

The Chinese Yuan firmed 0.4% in offshore markets to a one-week high of 6.5663 Yuan per dollar