US Dollar Surges As New Coronavirus Strain Spooks Investors, Offsets Fiscal Stimulus

The US dollar is staging a rally to kick off the trading week, buoyed by investors pouring into the traditional safe-haven asset as global financial markets plummeted. Despite the US government agreeing to a nearly $1 trillion coronavirus stimulus and relief package, traders were more focused on news of a new COVID-19 train that is starting to shut down Great Britain and other parts of Europe.

On Saturday, the UK government announced that a new coronavirus strain that is 70% more infectious is spreading throughout the country, accounting for about half of new cases in recent days. The variant that is quickly replacing other versions of the virus has also been found in Australia, Denmark, Italy, and the Netherlands. The mutation was first discovered in September.
But while experts do not think it should affect the efficacy of the current generation of COVID-19 vaccines, the mutation has governments reacting. The British government imposed fresh lockdowns, while more than 30 nations, like Canada, Germany, and France, have implemented travel restrictions.
Dr. Scott Gottlieb told CNBC that “COVID mutations are a reality.”

[The UK strain] doesn’t seem to have mutated the surface proteins of the virus in a way that they would slip past our vaccines or prior immunity. In fact, we don’t think that that’s the case. But what this does suggest is that eventually this vaccine probably will evolve its surface proteins in a way that they won’t be recognized by the antibodies we have right now, and we will have to update our vaccines.

Despite the disappointing development, there was still plenty of news to cheer on Monday.
Congress is set to vote on a $908 billion package that includes $600 checks to most Americans and $300 in enhanced unemployment insurance (UI) benefits for 11 weeks. Treasury Secretary Steven Mnuchin confirmed that the funds would begin to be distributed next week.
President-Elect Joe Biden welcomed the bipartisan agreement, but he and other Democratic leaders stated that this is a down payment on future stimulus and relief spending that his incoming administration would fight for in 2021.
On Friday, the Federal Reserve announced that it would permit large financial institutions to restart share buybacks in the first quarter of next year.
Still, the leading stock benchmark indexes slumped, with the Dow Jones Industrial Average felling 200 points and the Nasdaq Composite Index sliding 1%.
The US Dollar Index, which gauges the greenback against a basket of currencies, surged 0.46% to 90.43, from an opening of 90.15. The index, which is coming off a 1% weekly loss, had climbed to as high as 91.00 in Asian trading. Year-to-date, the DXY has plunged more than 6%.
The USD/CAD currency pair advanced 0.6% to 1.2863, from an opening of 1.2790, at 14:01 GMT on Monday. The EUR/USD fell 0.38% to 1.2213, from an opening of 1.2258.
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Original from: www.earnforex.com