2020.10.1912:06:00UTC+00U.S. Dollar Falls Amid Stimulus, Vaccine Hopes

The U.S. dollar weakened against its major counterparts in the European session on Monday, as hopes of a fresh U.S. stimulus package and optimism about a coronavirus vaccine lifted risk sentiment.

House Speaker Nancy Pelosi said on Sunday that differences remain with President Donald Trump's administration on a wide-ranging coronavirus relief package but she was optimistic legislation could be pushed before the Nov.3 election.

Drugmaker Pfizer announced on Friday that it could apply for US authorisation of the coronavirus vaccine by late November.

Encouraging earnings news from the likes of Julius Baer and Philips outweighed worries about fresh restrictions across the continent due to rising Covid-19 numbers.

Positive China data suggested that the economic recovery is accelerating from the Covid-19 crisis.

The National Bureau of Statistics said China's gross domestic product was up 4.9 percent on year in the third quarter of 2020, missing forecasts for a gain of 5.2 percent but still up from 3.2 percent in the three months prior.

The greenback depreciated to a 5-day low of 0.9115 against the franc, after rising to a 10-day high of 0.9166 at 2:45 am ET. On the downside, 0.88 is possibly seen as its next support level.

The greenback pulled back to 105.31 against the yen, from a 6-day high of 105.50 seen at 8:30 pm ET. If the greenback falls further, 104.00 is likely seen as its next support level.

Data from the Ministry of Finance showed that Japan recorded a merchandise trade surplus of 674.978 billion yen in September.

That was shy of expectations for a surplus of 989.8 billion yen, but still up from the 248.3 billion yen surplus in August.

The greenback slipped to a 4-day low of 1.3014 against the pound and a 5-day low of 1.1765 against the euro, off its prior highs of 1.2890 and 1.1703, respectively. The next key support for the greenback is seen around 1.32 against the pound and 1.20 against the euro.

Extending early decline, the greenback dipped to 4-day lows of 0.7115 against the aussie and 0.6644 against the kiwi. The greenback is likely to challenge support around 0.74 against the aussie and 0.68 against the kiwi.

The greenback fell back to 1.3170 against the loonie, heading to pierce a 4-day low of 1.3168 touched at 9:00 pm ET. The greenback is poised to find support around the 1.29 area.

Looking ahead, Canada wholesale sales for August and U.S. NAHB housing market index for October will be out in the New York session.