European session review: USD weakens as extended coronavirus-vaccine optimism and upbeat economic data from Asia support risk appetite

USD weakened against most of its major counterparts in the European session on Monday as investors' risk appetite improved following more positive news on COVID-19 vaccine development as well as stronger-than-expected economic data from Japan and China, pointing to a post-COVID recovery in the world's second- and third-largest economies.

Moderna (MRNA) announced on Monday that its coronavirus vaccine candidate reached a 94.5% efficacy rate in late-stage trials. Thus, the efficacy rate of Moderna's vaccine surpassed the 90%-threshold reported by Pfizer (PFE)/BioNTech (BNTX) last week. The announcements of effective COVID-19 vaccines raised hope for a swift economic recovery.

Japan's Cabinet Office reported that the country’s GDP surged by 21.4% y-o-y in the third quarter of 2020. That was the largest advance on record and exceeded economists' expectations for a jump of 18.9 percent y-o-y following the 28.8 percent y-o-y tumble in the second quarter. Meanwhile, China's industrial production (+6.9 percent y-o-y) and retail sales (+4.3 percent y-o-y) rose at a faster-than-forecast pace in October as the Chinese economy shrugged off the negative impact of COVID-19.

Market optimism was also supported by reports that President-elect Joe Biden's advisers opposed a nation-wide lockdown but preferred targeted measures to control the spikes in the U.S. COVID-19 cases.