alexa certify

Dollar Drops, Fed Boosts Risk Sentiment

The dollar sold off in early European forex trading on Tuesday. The Federal Reserve’s move to start purchasing U.S. corporate bonds boosted sentiment at the expense of safe-haven currencies.

The dollar index was down 0.2% at 96.498. The EUR/USD was up 0.2% to 1.1340, and the risk-sensitive AUD/USD was up 0.1% to 0.6924.

The U.S. central bank flew to the rescue again, stating it will start purchasing investment-grade U.S. corporate bonds. This was in a bid to secure companies’ access to cash and ensure credit market liquidity.

Analysts at ING said the Fed unloaded additional stimulus measures on Monday after market sentiment had soured over the week. The Fed’s Main Street lending program and expanded bond purchase scheme should help support risk sentiment. That’s with Jerome Powell trooping to the Senate to give testimony later on Tuesday.

Attention will quickly turn to Fed Chair Jerome Powell’s virtual testimony to the Joint Economic Committee on his economic outlook. This includes his recent monetary policy decisions.

Chief Economist Timothy Fox at Emirates NBD said Powell will testify to Congress later today. And he will likely repeat the dovish message about the economy delivered after the FOMC meeting last week.

Dollar Movements

Elsewhere, USD/JPY rose 0.1% to 107.47 in forex after the Bank of Japan kept monetary settings steady. But it increased its lending packages for cash-strapped firms to $1 trillion from about $700 billion announced last month.

The Sterling gained Tuesday, amid optimistic noises out of London and Brussels. That was after Brexit talks between Prime Minister Boris Johnson and the European Commission President Ursula von der Leyen.

However, the latest round of U.K. employment data was mixed. The jobless rate unexpectedly held steady at 3.9% over the three months to April. Albeit, many had expected a rise in the unemployment rate to 4.7%.

However, the claimant count in May increased by nearly 530,000. Moreover, the rise in April’s claims was revised up to over 1 million from 857,000.

Meanwhile, GBP/USD climbed 0.3% to 1.2641 and EUR/GBP fell 0.1% to 0.8972 in forex.

In forex news, the U.S. dollar fell against the Taiwan dollar on Tuesday. It shed NT$0.066 to close at NT$29.704.

Turnover has totaled to US $965 million during the trading session.  The safe-haven U.S. dollar opened at the day’s high of NT$29.750. It moved to a low of NT$29.585 before rebounding.

Comments Rating 0 (0 reviews)

Get the latest economy news, trading news, and Forex news on Finance Brokerage. Check out our comprehensive trading education and list of best Forex brokers list here. Subscribe now and receive FREE updates on the market today!

You might also like

Leave a Reply


Subscribe to Our Newsletters

Have the best of Finance Brokerage News delivered directly to your mailbox. Subscribe now to receive the latest market news.