The dollar plunged to its weakest level in more than 2-1/2 years on Thursday, while the euro held above $1.21, as signs of progress towards U.S. fiscal stimulus and optimism about COVID-19 vaccines kept investors upbeat.
The greenback tumbled to a nearly six-year low against the Swiss franc.
Lawmakers in Washington have failed to reach an agreement on economic stimulus to help relieve the impact of COVID-19 in the United States, but there were early signs that a $908 billion bipartisan proposal could be gaining traction.
Risk appetite was also boosted by optimism about recent developments towards the roll-out of COVID-19 vaccines. The UK approved Pfizer Inc’s vaccine on Wednesday.
In mid-morning trading, the dollar index, a measure of its value against six major currencies, fell 0.5% to 90.574, dropping as low as 90.554, the lowest since April 2018.
Data on initial claims for state unemployment benefits showed the number falling 75,000 to a seasonally adjusted 712,000 for the week ended Nov. 28. Economists polled by Reuters had forecast 775,000 applications in the latest week.
The report also weighed on the dollar.
Although tensions between the United States and China pose a downside risk, the latest developments have had limited impact on global markets because of the expectation of more normalised trade relations under the Joe Biden administration.
The euro soared to its highest since April 2018 at $1.2172 and was last at $1.2171, up 0.5%.
The European Central Bank said it will provide further stimulus to help the euro zone when it meets on Dec. 10. Market participants will also be paying close attention to any comments about the euro’s strength.
The dollar fell to a more than one-week low versus the yen and last traded down 0.7% at 103.70 yen . The greenback also dropped 0.5% against the Swiss franc to 0.8893 franc, after sinking to its lowest level since January 2015.
The pound was up 0.9% against the dollar at $1.3485, helped by the dollar weakness, as Brexit negotiations continue. EU diplomats said they hoped a Brexit trade deal with Britain could be agreed by Friday or at the weekend
.
Reference: CNBC
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