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Higher-risk currencies soar on Biden win, successful COVID19 vaccine

11/09/2020 | 09:06am EDT

* Nokkie, Japanese yen fall by 1.6% vs US dollar

* Aussie dollar skyrockets 2.4% vs Japanese yen

* Dollar index stays relatively calm

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

LONDON, Nov 9 (Reuters) - Trade-related currencies were buoyed on Monday by a pick up in risk appetite after Joe Biden clinched the U.S. presidency and Pfizer Inc said its experimental vaccine was more than 90% effective in preventing COVID-19.

The Scandinavian currencies and the Japanese yen were amongst the biggest movers, while the offshore Chinese yuan hit its strongest in 28-months.

A Biden presidency is expected to boost international trade relations and the prospect of a successful coronavirus vaccine is seen as a major tailwind, with global cases continuing to rise.

Simon Harvey, currency analyst at broker Monex Europe, said although markets were already trading with "an air of optimism", Pfizer's findings, based on initial data from a large study, had boosted risk appetite further.

"Although premature to solidify expectations of a widely available vaccine in the coming months, (the news) helped boost global growth expectations which took a substantial knock only weeks ago with second wave concerns," Harvey said.

That was benefitting higher beta currencies such as the Norwegian and Swedish crowns, boosting oil prices and "unravelling" dollar/yen, he added.

The dollar stabilised against a basket of currencies having touched a 10-week low of 92.12 and was last up 0.2% at 92.31.

The Swedish crown rose to a 28-month high of 8.5845 versus the U.S. dollar and to a 22-month high of 10.20 against the euro.

Its Norwegian counterpart rose 1.6% against both the dollar and the euro to hit two-month highs against each of 9.0025 and 10.7030 respectively..

The Australian dollar was up 2.4% at 76.85 against the Japanese yen, a seven-week high. The yen also fell 1.6% against the U.S. dollar to 105.

The offshore Chinese yuan was not far behind, hitting a peak of 6.5501 against the dollar and last up 0.3% at 6.5729.

The Canadian dollar and the Australian dollar both rose 0.8% versus the U.S. dollar with the latter hitting a seven-week high and the former a nine-month high.

"The removal of global uncertainty, a shift to dollar funding, and virus divergence against the U.S. all favour a weaker dollar into the end of the year," said George Saravelos, Deutsche Bank's currency analyst.

Saravelos expects the broad trade-weighted dollar to potentially drop by another 3% to 5% into the end of the year with euro/dollar convincingly breaking 1.20 and dollar/yen reaching 100.

U.S. dollar selling was being held in check, however, by the virus worries and because incumbent President Donald Trump has made no sign of conceding while fighting legal battles to overturn the result.

The prospect of more gridlock in Washington, with Republicans appearing likely to have retained control of the Senate -- although the final makeup may not be clear until runoff votes in Georgia in January -- means that expectations for a massive U.S. fiscal stimulus package have been lowered, sending bond yields down in anticipation of less borrowing and more quantitative easing from the Federal Reserve.

Euro/dollar - the most traded currency pair in the world - was up 0.1% on the day at $1.1892.

German exports rose by more than expected in September, and foreign trade gave Europe's largest economy a boost going into the fourth quarter as it struggles to avoid slipping into a double dip contraction.

(Reporting by Olga Cotaga; Editing by Toby Chopra, Kirsten Donovan)

© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / CANADIAN DOLLAR (AUD/CAD) -0.31% 0.92434 Delayed Quote.-5.21%
AUSTRALIAN DOLLAR / EURO (AUD/EUR) -0.20% 0.6255 Delayed Quote.-0.48%
AUSTRALIAN DOLLAR / JAPANESE YEN (AUD/JPY) 0.16% 81.415 Delayed Quote.2.35%
AUSTRALIAN DOLLAR / NEW ZEALAND DOLLAR (AUD/NZD) 0.03% 1.056 Delayed Quote.-1.24%
AUSTRALIAN DOLLAR / SWISS FRANC (AUD/CHF) -0.27% 0.6765 Delayed Quote.-0.37%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) -0.20% 0.7364 Delayed Quote.-4.07%
BRITISH POUND / AUSTRALIAN DOLLAR (GBP/AUD) 0.03% 1.86668 Delayed Quote.5.10%
BRITISH POUND / CANADIAN DOLLAR (GBP/CAD) -0.19% 1.72711 Delayed Quote.-0.44%
BRITISH POUND / JAPANESE YEN (GBP/JPY) 0.19% 151.985 Delayed Quote.7.52%
CANADIAN DOLLAR / AUSTRALIAN DOLLAR (CAD/AUD) 0.00% 1.081853 Delayed Quote.5.50%
CANADIAN DOLLAR / EURO (CAD/EUR) 0.00% 0.676402 Delayed Quote.5.08%
CANADIAN DOLLAR / JAPANESE YEN (CAD/JPY) 0.35% 87.964 Delayed Quote.8.07%
CANADIAN DOLLAR / SWISS FRANC (CAD/CHF) -0.01% 0.73114 Delayed Quote.5.28%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.00% 0.7958 Delayed Quote.1.31%
DOW JONES FXCM DOLLAR INDEX 0.11% 11957.01 Delayed Quote.2.41%
EURO / AUSTRALIAN DOLLAR (EUR/AUD) 0.17% 1.59773 Delayed Quote.0.53%
EURO / CANADIAN DOLLAR (EUR/CAD) -0.04% 1.47841 Delayed Quote.-4.81%
EURO / JAPANESE YEN (EUR/JPY) 0.36% 130.126 Delayed Quote.2.93%
EURO / SWEDISH KRONA (EUR/SEK) 0.02% 10.2305 Delayed Quote.1.68%
EURO / US DOLLAR (EUR/USD) -0.04% 1.1768 Delayed Quote.-3.63%
JAPANESE YEN / SWISS FRANC (JPY/CHF) -0.38% 0.8313 Delayed Quote.-2.66%
LONDON BRENT OIL 0.87% 74.19 Delayed Quote.42.40%
NEW ZEALAND DOLLAR / CANADIAN DOLLAR (NZD/CAD) -0.12% 0.87584 Delayed Quote.-3.99%
NEW ZEALAND DOLLAR / JAPANESE YEN (NZD/JPY) 0.27% 77.082 Delayed Quote.3.72%
NORWEGIAN KRONER / SWEDISH KRONA (NOK/SEK) -0.04% 0.9787 Delayed Quote.2.23%
PFIZER, INC. 0.51% 41.68 Delayed Quote.13.23%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) 0.00% 6.4726 Delayed Quote.-0.34%
US DOLLAR / JAPANESE YEN (USD/JPY) 0.34% 110.51 Delayed Quote.6.74%
WTI 0.50% 72.059 Delayed Quote.48.80%
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