Dollar rises as investors back away from riskier currencies, Fed leaves rates unchanged
The dollar edged higher against a basket of currencies on Wednesday after the Federal Reserve left interest rates near zero.
The dollar index ticked up 0.51% to 90.61 on Wednesday, following a 0.2% decline the previous session.
The dollar reversed declines against riskier currencies, even as pandemic recovery hopes got a boost from the International Monetary Fund’s upgrading its forecast for 2021 global growth.
Treasury yields, whose rise had supported the dollar at the start of this year, declined overnight amid caution about the eventual size of and delays to President Joe Biden’s $1.9 trillion fiscal stimulus plan.
The gauge has been consolidating since bouncing off a nearly three-year low of 89.206 at the start of the month.
The British pound climbed to its highest since April 2018 at $1.3753 before trading slightly lower at $1.3724.
The Aussie dollar slipped 0.2% to 77.30 U.S. cents, paring Tuesday’s 0.5% rally. The euro dipped 0.1% to $1.2146.
Analysts said reports on Tuesday the European Central Bank was studying whether differences with the Fed’s policy are boosting the euro - part of a wider review of financing conditions - would not have a material effect on the currency.
It’s “probably one of those headlines where it’s a buy on the dip moment in euro/dollar here,” said Jordan Rochester, FX strategist at Nomura in a note to clients. He remained long the euro/dollar spot rate, Rochester said, with a target of $1.25 by the end of March.
ECB President Christine Lagarde has repeatedly said the central bank is carefully monitoring the single currency’s exchange rate.
Reference: CNBC
Thai
Eng