So far this week the US dollar has lost around 1.14 percent of its value against a bundle of its main competitors and losing territory for the fifth consecutive day, mainly due to the advance of the coronavirus outbreak in the United States and the relatively weaker expectations of recovery for the country.
There are two main factors why the dollar has been losing territory in recent weeks. The first one is that at this moment the United States leads in the number of infections, with 15,398,550 confirmed cases as well as a death toll of 146,192. Some states are already reporting a peak in the number of new cases, among them Florida, Texas, Arizona and Georgia.
Recently some companies have claimed to be advancing towards launching an effective coronavirus vaccine. For example, the China National Pharmaceutical Group announced that the vaccine could be ready by the end of the year, as they expect to be done with the final trial in the next three months. Oxford-AstraZeneca also announced that they're now closer to an effective vaccine since its candidate produced a strong immune response.
The United States reached a deal with Pfizer and BioNTech, according to an announcement that was recently released by both companies. According to the announcement, the government plans to acquire a million doses of their experimental vaccine candidate, which will be worth around $1.95 billion dollars, though there's still a possibility of acquiring up to 500 million extra dosages.
"Americans will receive the vaccine for free consistent with U.S. government’s commitment for free access for COVID-19 vaccines," announced both companies on a joint statement, explaining that their vaccine development program is considering, at least, four investigation candidates.
Another factor that is affecting the performance of the US dollar is the fact that it seems that it's hard for investors to figure out what the United States is doing to face the effects of the virus, coupled with their relatively more pessimistic expectations for the future of the US economy.
While the Federal Reserve has pledged to do whatever is on its reach whenever needed, the United States’ lawmakers still struggle in terms of agreeing on the details of an additional stimulus package. Contrasting with the situation in the United States, the European Union agreed on a joint stimulus package that many consider "historic" given the profound disagreements that there are between the northern European countries and the rest of the bloc.
The fact that the Federal Reserve has decided to keep the cash rates at a historical minimum has diminished the attractiveness of the US dollar, which used to benefit from the gap in yields that there is between the US dollar and its main competitor, the Euro. This fact has also driven investors towards safer assets like gold, which usually struggle to compete with assets that offer yields.
In terms of the economic calendar, there aren't a lot of releases that could be highlighted when it comes to their relative influence in the Forex markets. On Monday the US Department of Treasury announced that the average yield on their auctioned 3-month bills stood at 0.12 percent while the average yield of their auctioned 6-month bills was at 0.13 percent.
On Tuesday the Federal Reserve Bank of Chicago announced that June's Chicago Fed National Activity Index stood at 4.11, over the analysts' expectations and May's figure, which was at 3.5. On Wednesday the Federal Housing Finance Agency released May's Housing Price Index, which dropped by 0.3 percent remaining in line with the analysts' expectations and below April's figure which stood at 0.1 percent. The existing home sales figure was at 4.72 million in June, after being at 3.91 million in the previous month.