The Euro fluctuated on Friday while Japanese Yen rose
The U.S. dollar halted its ascent on Friday, while the Euro remained near its four-week low against the greenback. The ECB hinted further monetary easing by the end of the year. Overnight, the common currency’s fall in addition to U.S. data helped to boost the dollar to a near four-week high against a basket of currencies.
On Thursday, the European Central Bank kept interest rates steady. However, the bank committed to containing the growing fallout from the second wave of Covid-19 infections, stating it would hone its response by its December meeting.
ECB President Christine Lagarde announced that all of them agreed that it was necessary to take action and to recalibrate their instruments at their next Governing Council meeting.
A build-up of expectations for ECB’s monetary easing could cause risks such as a dollar-buying spree or the Euro to drop further – noted Daisuke Karakama, chief market economist at Mizuho Bank.
However, the Euro slightly strengthened to $1.1679 in Asia, after plunging to a four-week low of $1.1650 in U.S. trade overnight. Against the Japanese yen, the Euro eased a little to 121.79 yen.
On Thursday, data showed the U.S. economy increased at a record pace in the third quarter. Furthermore, an improving trend in jobless claims still lingered despite surging Covid-19 cases.
How did the dollar trade today?
The dollar index traded flat at 93.889 on Friday, but it remained within reach of Thursday’s four-week high at 93.916, ready to mark the biggest weekly gains since the end of September.
Nonetheless, uncertainty surrounding Tuesday’s U.S. presidential election and Covid-19 fears continue to loom over FX market.
Makoto Noji, the chief FX strategist at SMBC Nikko, stated that there’s a move to sell the dollar back ahead of the election as greenbacks were bought mostly against the Euro for the past two days.
Global daily infection cases surpassed 500,000 for the first time, with Germany and France going back into coronavirus lockdowns next week. In the United States, cases rose over 91,000 on Thursday, setting the one-day record.
The Chinese yuan gained against the dollar as Chinese authorities endorsed a new five-year plan to drive economic growth.
The U.S. currency lowered against the Japanese yen at 104.30 yen, after surging forward overnight as it benefited from a recovery in U.S. treasury yields and broad dollar buying.
Sterling traded at $1.2906 as a lack of Brexit-related headlines undermined the currency. The European Union and London have two months to reach a post-Brexit trade agreement.
The Aussie last stood at $0.7032, slightly above a three-month low of $0.7002 marked overnight. Meanwhile, the New Zealand dollar held steady, last trading at 0.6619 per dollar.
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