Let us track the changes in the market. Uncertainties about the United States economic recovery and a new fiscal stimulus package continued to weigh down the market. The dollar slipped to a 27-month low in the previous session. Nevertheless, on Wednesday, the United States dollar edged slightly higher.
The Federal Reserve’s stimulus programs weakened the greenback broadly and lifted United States stock indexes to record highs. Thus, overnight, the dollar hit fresh lows against most major currencies.
Against a basket of currencies, the dollar was up by 0.15% in Asian trade, at 92.340.
Juntaro Morimoto is an analyst at Sony Financial Holdings. He said that there is a strong incentive for investors to want to sell the United States dollar. Moreover, he noted that the greenback has been declining since last month.
Having strengthened to its highest level since May 2018 in the previous session, the euro changed hands at $1.19305.
Morimoto of Sony Financial Holding that the market was swamped with ‘stretched long positioning on the euro.’ Thus, this could weigh down the currency.
Dollar and Others
Nevertheless, he said that dollar selling is the trend for now. Thus, he thinks there is enough room for the euro to accelerate its rise.
The sterling eased modestly from Tuesday’s eight-month high of $1.3241. It was last quoted at $1.3236.
In times of crisis, the dollar often functions as a safe-haven investment. Nevertheless, it has fallen after the Fed’s intervention into financial markets to maintain liquidity amid the COVID-19 pandemic.
The programs from the federal reserve have pushed riskier assets to all-time highs. Furthermore, it reduced demand for save-havens, even as economic data has painted a bleak picture of the United States’ recovery.
Minori Uchida works at MUFG Bank. He is a chief currency analyst there. He said that he does not think that the dollar will drop steadily. Nonetheless, there is a high possibility of gradual weakening to continue.
That is the current news of the market.