Dollar falls to 1-week low ahead of US retail sales data

The US dollar fell on Tuesday deepening its losses for the fourth straight day and hit a 1-week low, due to the strong market sentiment and appetite for high-risk currencies, after the positive news about Covid-19 vaccine candidates, while doubts about the US presidential election receded. Ahead of the release of key data on monthly retail sales, and industrial production during October.

The dollar index fell 0.3% to the lowest since November 9 at 92.29 points, after opening at 92.49 points, and hitting an intraday high of 92.60 points.

The index lost 0.1% yesterday, and posted its third straight daily loss, after Moderna announced the excellent results of its Covid-19 vaccine.

Demand for the greenback slowed down due to improved risk appetite, as doubts about the US presidential election receded, in addition to successive positive news about Covid-19 vaccine candidates.

The American company Moderna announced on Monday that initial data from the phase of the clinical trials showed that its coronavirus vaccine is more than 94.5% effective in preventing the disease.

This makes Moderna the second giant pharmaceutical company in the US to announce impressive results of Covid-19 vaccine trials within a week.

The pharmaceutical giant Pfizer and the German biotech firm BioNTech announced last week that their Covid-19 vaccine was more than 90% effective, according to recent data from the final phase of the clinical trials.

Similarly, the Russian sovereign wealth fund said on Wednesday that Russia’s Sputnik V vaccine is 92% effective at protecting people from COVID-19 according to interim trial results.

Uncertainty about the fate of the election has faded after Joe Biden won more votes in battleground states, especially in Georgia, and investors started to focus on the new US administration, which is expected to work quickly to pass further fiscal aid to support the US economy amid the coronavirus crisis.

The incumbent US President Donald Trump briefly acknowledged on Sunday that Joe Biden had won, but he soon backed down and tweeted that he's the winner in the presidential election, and pledged to keep up his legal battle against what he considered voting irregularities and fraud. However, experts rule out his winning chances.

President-elect Joe Biden is focusing on forming his new administration to face the coronavirus pandemic, and held multiple meetings with the big pharmaceutical companies that are developing Covid-19 vaccine candidates.

At 13:30 GMT, the monthly retail sales reading is expected to rise by 0.5% in October, slowing down from 1.9% in September, and the core reading (excluding car sales) is expected to rise by 0.6% from 1.5%. 

At 14:15 GMT, the monthly industrial production is expected to show growth by 1.1% in October vs. 0.6% contraction in September, and the capacity utilization index is expected to rise to 72.3% from 71.5%.