The American currency has lost momentum after US-based biotech firm Moderna announced positive results for its COVID vaccine.
Moderna said that all 45 participants in its phase one trial had produced antibodies to the new coronavirus. Investors are gradually dumping safe havens like the USD to focus on riskier assets.
The US Dollar Index, which tracks the American currency against a basket of six other currencies, declined by 0.02%.
Junichi Ishikwa, senior FX strategist at IG Securities, told CNBC:
“There has been a big improvement in risk sentiment because of hopes for a vaccine. Volatility is falling for stocks and dollar-funding costs are lower. It’s easy for the dollar to fall and for other currencies to ride the dollar’s losses higher.”
Meanwhile, Federal Reserve Chairman Jerome Powell stressed that the central bank was ready to use its “full range of tools to support the economy.” The Fed would maintain interest rates near zero until the economy is recovering.
Powell will appear later today for a virtual hearing with US Treasury Secretary Steven Mnuchin at the Senate’s CARES Act Report.
Government Stimulus Won’t Help Indian Economy Avoid Recession
As for India, economists are not confident that the stimulus package would help avoid the looming recession. Analysts at Bank of America and Nomura kept their earlier outlook figures pointing to a contraction of 0.1% and 5%, respectively, for the fiscal year 2021, even after the government announced its economic package worth over $130 billion.
India’s Prime Minister Narendra Modi announced last week a stimulus of up to 10 trillion rupees, which is 10% of GDP. Finance Minister Nirmala Sitharaman provided more details about the package on Sunday.
Nomura analysts concluded:
“The package may fall short of mitigating the near-term challenges for some businesses, but it is better designed to improve India’s medium-term growth potential and attract long-term risk capital.”