The United States Federal Reserve left the door open to more monetary easing. Thus, the dollar fell overnight. Moreover, positive trial results for a drug to treat COVID-19 also boosted risk appetite.
More and more countries are taking steps to re-opening their economies. Because coronavirus infections are slowing, thus, it raises optimist.
The United States dollar touched a two-week low before recovering somewhat, last up 0.1% on the day, against a basket of currencies. Before starting to recover, it came close to six-week lows versus the yen in early London trading, last at 106.63.
The riskier New Zealand and Australian dollars dipped down on Thursday morning, which rose overnight as risk sentiment improved.
Central banks set the theme for currencies. The euro is steady as traders’ eye European Central Bank meeting. The yuan rose to a two-week high.
The United States
Meanwhile, the euro was broadly flat. It was ahead of eurozone GDP data and the European Central Bank. Meanwhile, the United States dollar started to recover after a risk-on mood fell overnight in early London trading.
Moreover, for the first quarter of eurozone GDP data due at 0900 GMT will be advanced reading. The lockdown and social distancing measures were introduced for only a small portion of the period. The euro area GDP is forecasted to decline by 3.5 quarter-on-quarter. It is according to a Reuters poll.
Afterward, the attention will get the European Central Bank. Thus, there are expectations that policymakers of the eurozone will expand its debt purchases. It is to take other steps for easing conditions in credit markets and to include junk bonds.
Analysts forecast a move later today. Nonetheless, they are expecting that the European Central Bank will make it more likely to act in June.
Antje Praefcke is the Commerzbank EM and FX analyst. She told clients that there is no doubt that the European Central Bank underlines that it will implement further measures in case it is required.
- Trading Instrument