Home Personal Finance US dollar slides for third straight day on economic data, stimulus hopes,...

US dollar slides for third straight day on economic data, stimulus hopes, Economy News & Top Stories

20
0

NEW YORK • The US dollar fell for a third straight session on Thursday, with investors seeking out higher-yielding currencies, as a slew of better-than-expected US data and continued optimism about a massive stimulus package spurred hopes of a recovery in the world’s largest economy.

The euro, on the other hand, gained versus an overall weak US dollar, even as European Central Bank (ECB) president Christine Lagarde warned about a renewed surge in Covid-19 infections and the prospect of prolonged restrictions that could challenge the region’s economic outlook.

The ECB, which kept interest rates steady on Thursday, also pledged to provide more support for the economy if needed.

The foreign exchange market showed little reaction to Ms Lagarde’s comments, as market participants continued to focus on what seemed like an improving global economic outlook and a nearly US$2 trillion (S$2.6 trillion) stimulus package proposed by new Democratic President Joe Biden’s administration.

On Thursday, US data showed an economy slowly getting some traction, with slightly better-than-expected initial jobless claims, upbeat housing starts data, and a higher factory index for the mid-Atlantic region.

“Across asset markets, optimism about growth is high and I think it’s appropriate,” said Mr Anujeet Sareen, global fixed income portfolio manager at Brandywine Global Investment Management in Philadelphia.

“We see the dollar going lower because global growth will get better, the trade balance is deteriorating, and the Federal Reserve is going to keep its easy monetary policy.”

The US dollar typically loses out against its major peers in times of global expansions, when investors are inclined to take on more risk.

In late afternoon trading, the US dollar index fell 0.3 per cent to 90.103, after touching a nearly one-month high of 90.956 on Monday.

The euro gained 0.5 per cent against the dollar to US$1.2163, rising 0.5 per cent, as well versus the yen to 125.92 yen.

That said, TD Securities global head of foreign exchange strategy Mark McCormick noted that there is a brewing shift for a lower euro against the US dollar because of delays in vaccinations in the euro zone compared with in the United States.

“These delays will result in a slower timeline to herd immunity. The downside for markets is that it’s also likely to have an immediate impact on the mobility and growth trends,” Mr McCormick wrote in a research note.

The greenback also dropped versus currencies tied to commodity prices such as the Australian, Canadian and New Zealand dollars.

Sterling likewise set a fresh 21/2-year high against the US dollar and a new eight-month peak against the euro on hopes that Britain’s brisk pace of Covid-19 vaccinations would lead to a relatively quicker rebound in economic growth.

Many analysts overall expect the US dollar to continue its downtrend, which saw it lose nearly 7 per cent last year.

In the cryptocurrency market, bitcoin slumped 9.1 per cent to US$32,247, retreating further from record highs, with traders citing fears of tighter US regulation.

REUTERS



Straitstimes News

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.