US dollar slides as vaccine news offsets surge in virus cases

New York

THE US dollar slipped last Friday, as its safe-haven allure diminished, on hopes of a potential vaccine for the novel coronavirus that outweighed concerns about the surge in infections in the United States and around the world.

The US currency posted its largest weekly percentage loss against a basket of major currencies in a month.

Last Friday, Gilead Sciences said that additional data from a late-stage study showed its antiviral remdesivir reduced the risk of death and significantly improved the conditions of severely ill Covid-19 patients.

That helped a rally in US stocks and pushed the US dollar lower. In late afternoon trading, the US dollar index fell 0.2 per cent to 96.624.

The currency also slid after US producer prices unexpectedly fell 0.2 per cent in June, following a 0.4 per cent rebound in May, as the economy battles depressed demand amid the Covid-19 pandemic.

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Reflecting the market's increased risk appetite, the euro rose 0.2 per cent against the US dollar to US$1.1300, while the British pound was up 0.1 per cent at US$1.2631.

The US dollar also fell to a two-week low against the safe-haven yen. It was last down 0.3 per cent at 106.92 yen.

The yen has been trading in a narrow range despite the ebbs and flows of risk sentiment, as one-month implied and historical volatility close to its record low.

But Monex said that technical indicators in the options market are signalling investor concerns about future outbreak in volatility.

The Chinese yuan in the offshore market, meanwhile, was down about 0.2 per cent at 7.0114 per US dollar, having touched a near-four-month high of 6.9808 on Thursday.

The Chinese currency gained almost one per cent last week, supported by hopes of capital inflows, as share prices rebounded after Beijing indicated that it wants a healthy bull market. REUTERS