The dollar fell to its lowest in over two years against major currencies on Thursday after the Federal Reserve stuck to its current policy guns while hopes for more U.S. stimulus and a post-Brexit trade deal boosted appetite for riskier currencies, Reuters writes.
Congressional negotiators were closing in on a $900 billion COVID-19 aid bill in the United States, according to lawmakers and aides, boosting stock markets across the globe.
The dollar index continued to retreat during morning trading in Europe, falling at one point to a new low of 89.867 against a basket of currencies after breaking below 90 for the first time since April 2018.
“While we expect stocks to benefit further from positive news on vaccine rollouts and U.S. fiscal support, the same cannot be said for the U.S. dollar,” said Mark Haefele, chief investment officer at UBS GWM. “Safe-haven demand for the dollar is being eroded by a broadening global recovery.”
The Federal Reserve on Wednesday said it would keep funnelling cash into financial markets until the U.S. economic recovery is secure. The promise of long-term help fell short of some investors’ hopes of an immediate move.
The dollar index rose after the Fed’s announcement, but the respite was short-lived.
Meanwhile, optimism the European Union and the UK will finally reach a post-Brexit trade deal boosted the pound, which rose to $1.3615, its highest level since May 2018.
EU Brexit negotiator Michel Barnier reported “good progress” in the talks but cautioned “last stumbling blocks” stood in the way of sealing a new trade pact.
The pound didn’t make any significant moves and kept trading above $1.36 after the Bank of England kept its stimulus programme unchanged as it awaited for the outcome of the Brexit trade talks.
The euro traded as high as $1.2244, its highest since April 2018, before giving up some of its gains.
Be the first to comment