US dollarCurrencies are settling into narrower ranges to start the day, after a robust performance in overnight trading amid major risk-on vibes. The dollar and yen were the two main laggards, but the overall picture is more mixed in the session ahead.
Cable has moved to a session high of 1.2247, rising from levels closer to 1.2200 just an hour ago as the dollar slipped across the board to start European morning trade. The dollar and yen found themselves on the back foot again, with USD/JPY higher around 107.40. The euro jumped against the dollar after Germany and France issued a call for a 500 billion-euro recovery fund for Europe and proposed to allow the European Commission to borrow money on markets to finance the fund.
US futures have also soared higher and is nearing gains of 1% as the S&P 500 index looks poised to start challenging its key daily moving averages in US trading later. Moderna Inc’s COVID-19 vaccine, the first to be tested in the United States, showed it produced protective antibodies in a small group of healthy volunteers. The positive early test results boosted sentiment as investors wagered on a faster-than-expected economic recovery.
Oil prices jumped on positive early results on a potential coronavirus vaccine, optimism about a resumption in economic activity and signs producers were following through on planned output reductions.
Gold retreated from a more than seven-year high, on optimism surrounding the trial of a potential COVID-19 vaccine and risk-on market sentiment.
Economic data will once again matter little in the day ahead as the focus is all on risk, with coronavirus and US-China headlines to hog the limelight. Next of note is the release of the forward-looking German ZEW survey on economic sentiment for May due at 09:00 GMT. Later during the early North American session, the US housing market data – Building Permits and Housing Starts at 12:30 GMT will be closely eyed ahead of Fed’s Chair Powell testimony at 14:00 GMT.