Nixse
0

Riskier Currencies Skyrocketed Wednesday while Dollar Fell

 The U.S. dollar plummeted down to a one-month low on Wednesday after U.S. President Donald Trump gave investors hope for a large fiscal stimulus package. President’s statement prompted a wave of market optimism, and traders turned to riskier currencies.

 

Lawmakers in Washington have been negotiating stimulus deal since August, with Democrats demanding a bigger package to help manage the economic crisis caused by a coronavirus. On Tuesday, Trump raised hopes for a breakthrough by announcing that he was willing to accept a large aid bill, in spite of opposition from his Republican party.

 

What do strategists think?

ING strategists stated that all in all, the chances of a stimulus bill being passed looks rather unlikely. They doubt that traders have high expectations in these terms.

 

However, experts also claimed that a collapse in negotiations would not do serious damage, because investors still expect stimulus to be passed after the U.S. elections if Democrats come out winners.

 

They added that, the fact that currently, the probability of a bi-partisan deal increasing rather than decreasing may put a floor below risk assets and high-beta FX. At the same time, the U.S. dollar could stay gently offered across the board. That story may even remain the dominant driver for markets for the rest of the week as both parties attempt to reach a potential deal by the weekend.

 

On Wednesday, the greenback tumbled down by 0.3% against a basket of currencies, at 92.801. On the other hand, the riskier New Zealand and Australian dollars surged forward. The Kiwi gained 0.6% and the Aussie adding 0.5%.

 

The Norwegian crown also hit a one-week high of 9.196 against the U.S. dollar. While the Canadian dollar jumped to its strongest point in more than six weeks, reaching 1.3081 per dollar.

 

Meanwhile, the euro skyrocketed to a one-month high versus the greenback in early trading. It traded higher by 0.3% at $1.18555.

 

 

How did the Chinese currency fare? 

 

The Chinese yuan also surged forward, in both onshore and offshore trading, boosted by firmer central bank guidance. In addition, recent data suggested a more sustained recovery in the world’s second-largest economy, strengthening the sentiment.

 

As a result, the offshore yuan reached its strongest level in two years against the dollar at 6.6278 towards the end of the Asian session. But it lowered again somewhat and at last traded up by only 0.4% at 6.6374.

 

Commerzbank FX and EM analyst Hao Zhou noted that there had been few U.S.-China headlines recently and they have somehow encouraged the optimism towards the Chinese currency.

  • Support
  • Platform
  • Spread
  • Trading Instrument
Comments Rating 0 (0 reviews)


You might also like

Leave a Reply

User Review
  • Support
    Sending
  • Platform
    Sending
  • Spread
    Sending
  • Trading Instrument
    Sending