Dollar Up, But Near Three-Year Lows, Fed Continues Dovish Tone
By Administrator_India
The dollar was up on Thursday morning in Asia, but stayed near three-year lows, as the U.S. Federal Reserve continued a dovish stance that stoked reflation fears.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.07% to 90.095 by 9:24 PM ET. The U.S. currency also fell to a fresh low against the Australian dollar and hovered near lows seen overnight against the pound as well as the Canadian and New Zealand dollars.
The USD/JPY pair edged up 0.16% to 106.03. The yen, a fellow safe-haven currency to the dollar, saw a third consecutive of losses against the greenback.
The AUD/USD pair inched down 0.07% to 0.7962, afetr the AUD climbing to a fresh three-year high earlier in the session. Across the Tasman Sea, the NZD/USD pair edged down 0.12% to 0.7424, close to the multi-year highs reached during the previous session.
The USD/CNY pair was steady at 6.4558.
The GBP/USD pair inched down 0.03% to 1.4135, with the pound nearing the $1.43 mark during the previous session for the first time since April 2018.
The euro was also trading near the top of its recent range, after nearing a one-month high earlier in the week.
Fed Chairman Jerome Powell on Wednesday reiterated that the central bank would maintain its easy policy until there are clear signs of economic improvement and would look through the short-term rise in inflation. The comments, part of Powell’s testimony before the House of Representatives Committee on Financial Services, were not dissimilar to Powell’s testimony before the Senate on Tuesday.
“Powell made it very clear that the improvement in the economic outlook thus far will not instigate the Fed to tighten monetary policy … the punch bowl ain’t going anywhere anytime soon and the policy backdrop should remain supportive for risk assets for some time,” National Australia Bank foreign exchange strategist Rodrigo Cattrill said in a note.
Investors also continue to turn to the reflation trade, placing bets on increasing economic activities and prices, driven by easy financial conditions, the promise of fiscal stimulus and an accelerating COVID-19 vaccine rollout.
In a boost for the global vaccine rollout, an Israeli study showed that two doses of the Pfizer Inc. BioNTech SE COVID-19 vaccine cut symptomatic COVID-19 cases by 94% across all age groups, and severe illnesses by nearly as much. The study results were published and peer-reviewed in the New England Journal of Medicine on Wednesday.
