Dollar inched up over setbacks of COVID-19 vaccines

On Wednesday, the dollar was up holding gains from previous sessions as setbacks in developing a COVID-19 treatment and a lack of consensus over the latest stimulus measures in the U.S. sent investors scrambling for safety. 

The U.S. Dollar Index inched up 0.01% to 93.550 by 10:12 PM ET (2:12 AM GMT). 

Ely Lilly and Co. on Tuesday paused its government-sponsored clinical trial of its Covid-19 antibody treatment, similar to the one taken by President Donald Trump during his bout with the virus. The pause comes on the heels of Johnson & Johnson suspending clinical trials for its COVID-19 vaccine on Monday due to a mystery illness in one of the participants, and dampened hopes that a treatment would be released soon. 

Hopes that Congress would pass the latest stimulus bill ahead of the Nov. 3 Presidential Election continue to fade, dampening economic outlook. Although no big moves are anticipated ahead of the elections, some investors predicted that the dollar would continue to be supported by the dampened sentiment over the next few days.  

Other investors listed even more reason to be optimistic about the greenback’s prospects. 

“Many factors are pointing to more upside for the dollar … U.S. stimulus may not come until after the election. The People’s Bank of China (PBOC) is halting the yuan’s rise. There’s no reason to buy the euro, and there are a lot of euro longs that need to be unwound,” Mizuho Securities chief currency strategist Masafumi Yamamoto told Reuters.”

Technical Outlook

In the daily charts of GBP/USD, the pair gained slightly early Wednesday morning in Sydney Session.  

The GBP/USD pair inched up 0.01% to 1.2935. The pound extended declines as the U.K continues to battle a second wave of COVID-19 cases and re-implements measures restricting economic activity. 

Further adding to the sterling’s woes are worries about the little progress made towards a Brexit deal between the U.K. and the European Union, with less than two days to go ahead of Prime Minister Boris Johnson’s self-imposed Oct. 15 deadline. The possibility that the Bank of England could introduce negative rates also dampened investor sentiment. 

The pair may thread lower and reach the support level at 1.2688 in the following days or weeks. 

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