Dollar Falls to 2.5 Year Lows as Investor Risk Appetite Grows

The dollar dropped to its April 2018 level lows as investors embraced risk assets following fast-tracked vaccine rollout plans in the US.

According to US officials, vaccinations may start in less than three weeks - news which had the dollar drop as much as 0.2% according to the Bloomberg Dollar Spot Index. Taking a look at USD’s March highs, the currency has already shed over 11%, as prospects of pandemic end and underlying economic recovery loom.

“The vaccine news is favoring the view of a sooner-rather-than-later global economic recovery with the USD losing its safe haven appeal along the way. This is a risk-positive, USD-negative backdrop, especially with the Fed likely to remain ultra-dovish for some time”, Rodrigo Catril, a currency strategist at National Australia Bank commented.

Most leading analysts appear to agree. Morgan Stanley recommends selling the dollar in favor of stocks and credit, while Goldman Sachs prefers shorting the currency against some developing-nation-currencies, such as the Mexican peso and the South African rand.

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