Nvidia’s results, Tesla’s European sales, Japan trade - what’s moving markets
* Dollar stabilises after gaining on vaccine news
* Yen and Swiss franc recover losses
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
(Updates prices, adds commentary and chart)
By Elizabeth Howcroft
LONDON, Nov 10 (Reuters) - The dollar edged up on Tuesday
and the yen stayed low, as investors remained optimistic about
progress towards a COVID-19 vaccine, although the moves were
more tempered than in the previous session.
U.S. drugmaker Pfizer Inc PFE.N and German partner
BioNTech SE BNTX.O said on Monday a large-scale clinical trial
showed their vaccine was more than 90% effective in preventing
COVID-19 - news which lifted global markets with a wave of risk
appetite, which subsided somewhat overnight before re-igniting
on Tuesday. The dollar rose after the announcement. Although the dollar
is a safe-haven, and so typically falls on positive news,
analysts said the move was caused by investors quitting long
positions in other major safe-haven currencies such as the
Japanese yen and the Swiss franc. The dollar edged up slightly and stayed close to the
previous session's highs, as market participants tempered their
initial pro-risk reaction, in light of uncertainty about how or
when a vaccine could be rolled out. Neil Jones, head of FX sales for financial institutions at
Mizuho, said he expected the risk-on moves to continue.
"I don't think it's over and don't think the foreign
exchange market will become completely skeptical," he said.
"It will not write off the prospect of a vaccine – even
though we need more clarity in terms of the distribution,
quantities, timeline, and to whom," he said. "On balance, that
optimism will remain for now."
At 1229, the dollar was at 92.792 against a basket of
currencies, slightly up on the day =USD .
The dollar has lost around 1.4% this month as Democrat Joe
Biden's victory in the U.S. presidential election provided a
major boost to market sentiment. The Japanese yen, which had its biggest one-day fall since
March after the vaccine announcement, clawed back some of its
losses but was still relatively weak at 105.155 at 1220 GMT.
"Following a euphoric market reaction such as that the
question that now arises is whether it was justified or possibly
exaggerated," wrote Commerzbank FX and EM analyst You-Na
Park-Heger in a note to clients.
"Even if the news of a vaccine could be a game changer, we
urge caution, as the massive euphoria could be followed by some
disenchantment," she said.
Euro-dollar was broadly flat on the day at $1.1815. In the
previous session it rose to as high as $1.192, but went no
further, which Mizuho's Jones said could be due to the European
Central Bank having signalled its awareness of the downsides of
rapid euro strength EUR=EBS . "The market is a little bit concerned about repeat verbal
intervention in the euro around the 1.20 area so I think sellers
maybe dropped their offers down lower than that 1.20, thinking
that that might be the limit of the upside," Jones said.
The Australian dollar - seen as a liquid proxy for risk
appetite - was broadly flat on the day versus the dollar, as its
jump in the immediate aftermath of the vaccine news proved
short-lived AUD=D3 .
The New Zealand dollar was up 0.2%, in its seventh
consecutive session of gains NZD=D3 .
The Norwegian crown, which also benefited from the vaccine
news, extended its gains versus the euro on Tuesday, up 0.4% on
the day at 10.644 EURNOK=D3 .
China's offshore yuan, which has been gradually
strengthening since May, hit new 2.5-year highs versus the U.S.
dollar on Monday but eased some gains on Tuesday, up 0.2% on the
day at 6.6028 at 1228 GMT CNH=EBS .
U.S. President Donald Trump plans to push ahead with legal
challenges to the presidential election results and will hold a
series of campaign-style rallies to build support.
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