S& P 500 hits all time highs U.S.-Japan trade deal optimism
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
(Updates prices, adds commentary)
By Elizabeth Howcroft
LONDON, Oct 14 (Reuters) - The dollar index held its recent
gains on Wednesday and the euro touched a nine-day low, as
global equity markets remained cautious in light of diminishing
hopes for a COVID-19 vaccine or U.S. fiscal stimulus.
The rally in global equities started to run out of steam on
Tuesday and risk appetite suffered, with the dollar index seeing
its biggest daily jump in three weeks.
Johnson & JNJ.N said it was pausing a clinical trial of a
coronavirus vaccine and Eli Lilly and Co LLY.N also said it
had paused a clinical trial of an antibody treatment. British
drugmaker AstaZeneca Plc's ANZN.L U.S. trial for a vaccine has
been on hold for over a month. Most major currency pairs saw only small moves on Wednesday.
The pound was the biggest mover in early London trading, falling
as low as $1.2865 as hopes dimmed for a Brexit agreement, before
recovering to $1.2950 GBP=D3 .
The dollar index was at 93.554 at 1045 GMT, flat on the day,
having briefly risen and exceeded the previous session's high of
93.599 =USD .
Euro zone industrial production data showed the rate of
recovery slowed sharply in August, in line with expectations.
"The small gain in August leaves us with the impression that
the first months of rapid recovery from the lockdown period are
behind us," wrote Bert Colijn, a senior economist at ING.
"With rebound effects fading, second waves emerging and
restrictive measures becoming more intrusive for business, there
is no doubt that the rosy figures related to the rebound from
the first lockdown are a thing from the past," he added.
At 1046 GMT, euro-dollar was down 0.1% on the day, at
1.17360 EUR=EBS .
Hopes for a new coronavirus relief package in the United
Sates faded. The Senate is due to vote next week on a targeted
$500 billion aid bill of the type that Democrats have already
rejected. Kit Juckes, head of FX strategy at Societe Generale, said
that the market was characterised by "ennui" and "angst", in the
absence of a clear driver before the U.S. elections.
But markets still expect that a victory for Democrat Joe
Biden in the U.S. presidential elections will result in more
fiscal stimulus.
"The assumption of Biden legislating a large fiscal stimulus
package will continue to limit fallout in the markets from the
lack of near-term fiscal stimulus," wrote MUFG strategist Derek
Halpenny.
The yen and Swiss franc both rose around 0.1% versus the
dollar JPY=EBS CHF=EBS .
But there were still some signs of risk appetite, as the
Australian and New Zealand dollars edged up.
The Australian dollar was up 0.1% on the day at 0.71690
versus the U.S. dollar at 1053 GMT AUD=D3 , and the New Zealand
dollar rose 0.3% to 0.6663 NZD=D3 .
"Both Australian and New Zealand dollars, when you look at
how well the Chinese economy's doing, fundamentally, I think
they're both in good shape, in the medium term," Societe
Generale's Juckes said.
China's third-quarter gross domestic product growth is
expected to improve from the previous quarter, a People's Bank
of China official said. The Norwegian crown was up around 0.2% against the dollar,
at 9.234 NOK=D3 .
The International Monetary Fund gave a slightly improved
forecast for the hit to global growth in 2020, but lowered their
forecasts for many emerging markets.