FX Update: The dollar posted fresh lows

FX Update: The dollar posted fresh lows, continuing last week's theme as global stock markets and commodity prices surged. EUR-USD posted an eight-week high at 1.1899, while the DXY dollar index concurrently printed new two-month low at 92.13. Sharp weakness in the Japanese currency saw USD-JPY buck the dollar weakening theme. The pair rose by over 0.5% in climbing back above 103.80. The pair left last week's eight-month low at 103.17 unchallenged, with the yen returning to form as an inverse correlate of risk appetite in global markets. The biggest gainers were the dollar bloc currencies, alongside many currencies of newly developed and developing nations, which rallied strongly as risk-on positioning intensified on news from Pfizer, which stated that its candidate Covid-19 vaccine was 90% effective. Markets are also responding to the emerging likelihood of a Biden presidency and a Republican Senate. This is seen as a Goldilocks outcome from Wall Street's perspective, increasing the prospect for fiscal stimulus while decreasing the prospect for tax hikes and regulation that a Democrat controlled Congress would likely entail. Japan's fiance minister said that policymakers there are watching currency levels with a sense of "urgency," which may have helped USD-JPY higher. It can be expected that at least some of the upcoming slew of ECB policymaker signalling, which will include President Lagarde, will be explicit in the unwanted tightening effect of a rising exchange rate following the biggest weekly rise in EUR-USD in nearly four months, which may explain the stalling upside momentum in the pair. USD-CAD dove to a 10-month low at 1.2964, with the Canadian dollar buoyed by a near 8% surge in oil prices. AUD-USD rallied to a near two-month peak at 0.7329, which marked a near 3.5% gain from week-ago levels.