Forex - Dollar Pushes Higher as Drug Trial Disappoints

Forex - Dollar Pushes Higher as Drug Trial Disappoints

Investing.com  | Apr 24, 2020 08:07

Forex - Dollar Pushes Higher as Drug Trial Disappoints

By Peter Nurse

Investing.com - The U.S. dollar has been in demand Friday, as disappointment surrounding a trial for an antiviral drug to combat Covid-19 deflated hopes for a quick breakthrough in bringing the pandemic under control.

At 3:15 AM ET (0715 GMT), the U.S. Dollar Index, which tracks the greenback against a basket of six other currencies, stood at 100.950, up 0.4%, and at levels not seen since the beginning of April. GBP/USD fell 0.2% to 1.2324, while USD/JPY rose 0.1% to 107.68.

Doubts have emerged over the efficacy of Gilead (NASDAQ:GILD) Sciences’s antiviral drug remdesivir in treating the Covid-19, after the Financial Times reported overnight that it had failed its first randomized clinical trial.

Gilead has disputed the report, saying the study was “terminated early due to low enrollment,” and thus “the study results are inconclusive.” 

However, this has resulted in the dollar being sought as a safe haven as the drug was previously thought to be one of the best prospects for treating the virus. 

The euro has also weakened against the greenback as after EU leaders agreed few details about the shape of post-crisis recovery plan would be financed -  although they did sign off on a  pre-agreed €500 billion euro emergency financial package.

European Central Bank President Christine Lagarde warned that the European Union's economy could shrink by as much as 15% this year as a result of the pandemic.

At 3:15 AM ET, EUR/USD at 1.0729, down 0.3% and its lowest in a month.

“With EU’s failure to reach a clear agreement (as somewhat expected), EUR/USD has moved about 1 figure lower over the past few days,” said analysts at Danske Bank, in a research note. “In our view, this continues to suggest the eurozone’s lack of coherence is accumulating to a trending negative risk premium in spot.” 

Further signs of the stress the union is under could come later Friday as rating agency S&P could downgrade its investment rating on Italy to just above junk status - meaning that the cost of borrowing for this heavily indebted nation could rise as it tries to recover from being especially hard hit by the coronavirus outbreak.

In emerging markets, the USD/RUB is steady ahead of a widely expected rate cut from the Central Bank of Russia at its policy meeting later, while the Brazilian real remains under pressure after falling to a new all-time low against the dollar on Thursday.

 

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