Euro Rallied on Tuesday. What about Riskier Currencies?
The euro skyrocketed on Tuesday, nearing a three-month high due to expectations of more monetary stimulus and strengthening recovery. Positive sentiment boosted riskier currencies as well.
The New Zealand dollar was on course to reach its highest level since June 2018. Optimism about promising vaccine trials encouraged traders to buy riskier currencies. However, worries about surging coronavirus cases remain, causing the dollar to lose support, as traders speculate that the Fed will act to support the economy through winter.
The Fed plans to set a new policy during its meeting on Dec. 15 and 16. Fed Chair Jerome Powell will also speak before Congress. Investors hope for some clues about the Fed’s next moves from his remarks.
Furthermore, Powell and Treasury Secretary Steven Mnuchin are going to testify on the CARES Act. Congress used that Act to make $2 trillion available to the Treasury as Covid-19 pandemic aid.
However, Mnuchin cut off the aid programs recently and requested that the Federal Reserve return unused funds, declining any extension. Charalambos Pissouros, the senior market analyst at JFD Group, stated that it would be interesting to see what the two officials have to say on the matter.
He also added that the U.S. government has yet to agree with Congress on a new fiscal package, which makes a case for the agency to act in December more likely. However, if that happens, the greenback and other safe-haven currencies could come under selling pressure.
How did major currencies trade?
The Euro/dollar pair surged forward by 0.4% at $1.1968. Meanwhile, the dollar index tumbled down by 0.2% at 91.74 against a basket of currencies.
The Norwegian crown soared by 0.5% against the dollar, trading at 8.8435 on Tuesday. The Swedish crown also rallied by 0.4% at 8.5355. Both increased against the euro, as well.
The British pound jumped by 0.5% versus the dollar, reaching a three-month high of $1.3409. The Australian dollar also climbed up by 0.2%. And the Kiwi was close to surpassing a two-year high above 0.7051, last surging by 0.4% at 0.7038.
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