The US dollar dropped to a 2 1/2-year low as the prospect of vaccine rollouts added to headwinds for the world’s reserve currency.
The Bloomberg Dollar Spot Index fell as much as 0.2 per cent to an April 2018 low after US officials said vaccinations may start in less than three weeks. The pound and the Norwegian krone led gains against the greenback, while the yield on 10-year US Treasurys rose three basis points to 0.86 per cent. The Australian dollar is also benefiting from the US dollar weakness, rising to around 73 US cents. In March, it was below 58 US cents.
Pressure is building on the US dollar.Credit:Phil Carrick
“The vaccine news is favouring the view of a sooner-rather-than-later global economic recovery with the USD losing its safe-haven appeal along the way,” said Rodrigo Catril, a currency strategist at NAB. “This is a risk-positive, USD-negative backdrop, especially with the Fed likely to remain ultra-dovish for some time.”
An inoculation that offers adequate protection against infection could help power a rebound in global growth and add momentum to a rally in equities and other riskier investments. That outlook is undermining the greenback, which tends to benefit in times of heightened uncertainty.
