The recent period has been volatile for currency markets tossed about by US election uncertainty, stimulus spending doubts and both good and bad news from the COVID-19 frontline.
Early last week Pfizer published results of an experimental mRNA vaccine showing it blocked more than 90 per cent of COVID-19 cases. This was followed this week by even better results from a similar Moderna vaccine leading to most ‘Risk-on’ major and emerging currencies gaining against USD.
Also spoiling the feel-good factor was the US government that backed away from further fiscal stimulus.
Two senior advisers to British Prime Minister Boris Johnson have quit, creating turmoil in his inner circle.
Yet Cummings leaving is positive news for the pound with the markets thinking a ‘Brexit Deal’ more likely to happen.
As expected, the Reserve Bank of Australia announced rate cuts to 0.1% in early November. The move aimed to drive the AUD lower, however increased risk appetite has benefited the AUD commodity currency, allowing AUD to USD to extend beyond 0.73 US cents.
Westpac sees NZD to USD at US70c by year end after steady gains of 3 cents to US69c since early November. This rise was after RBNZ said negative rates less likely if banks use cheap loans. NZD/AUD at 0.9409 is 1.5% above its 90-DAY average.
During the pandemic, the higher yielding Mexican peso has strengthened from nearly 25 units per dollar to close to 20, impacting US-based Mexican workers remitting dollars home to their families.