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FOREX-Dollar hovers near two-year lows as U.S. stimulus, Fed meeting embolden investors

Published 15/12/2020, 17:12
© Reuters.
USD/SEK
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By Suzanne Barlyn
Dec 15 (Reuters) - The dollar hovered close to two-year lows on Tuesday as progress toward a massive
U.S. government spending bill and COVID-19 relief measures boosted spirits while investors awaited
interest rate cues from the Federal Reserve's final meeting of the year.
The dollar index, which measures the greenback against a basket of currencies, was last at 90.5750
=USD , after sinking as low as 90.419 on Monday, a level unseen since April 2018.
Hopes that U.S. lawmakers can agree $1.4 trillion in spending and more clarity about COVID-19 vaccine
distribution have whetted investors' risk appetite, driving them away from safe-haven currencies.
Those sentiments spurred Wall Street's main indexes higher on Tuesday. In another step toward broader vaccine distribution, Moderna Inc's MRNA.O COVID-19 vaccine appeared
set for regulatory authorization this week after U.S. Food and Drug Administration staff endorsed it as
safe and effective in documents released Tuesday. "We have equity market moves based on vaccine headlines and prospects for fiscal stimulus, but if you
look at the bigger picture, nothing's really changed," said Ronald Simpson, managing director, global
currency analysis at Action Economics.
The dollar, which barely reacted to data published on Tuesday for U.S. industrial production and New
York State manufacturing will likely remain under pressure into 2021 as vaccines roll out and economies
re-open, Simpson said.
The Fed, which begins a two-day meeting later on Tuesday, is expected to keep its key overnight
interest rate pinned near zero and to signal it will stay there for years to come. Such moves
would further boost investors' confidence for risk-taking, analysts said.
Many analysts also expect new guidance on how long the Fed will keep up its massive bond-buying
program.
Broad-based selling of the U.S. dollar drove the euro to hover near a 2-1/2 year peak on Tuesday. The
single currency has rocketed 4% since early November to its highest level since April 2018, in part
because of broad-based selling of the U.S. dollar and as investors bet a vast European recovery fund
package will lift the regions' economies.
The euro was last at $1.2152, up 0.07%. EUR=EBS .
Elsewhere, sterling continued to maintain its Monday surge, triggered by news Britain and the European
Union would keep on talking to try and seal a Brexit trade deal. The pound was last at 1.3377 GBP=D3 , up
0.38%.
The Australian dollar was up 0.11% to $0.7540 AUD=D3 after touching the highest since June 2018 at
$0.7578 on Monday.
Bitcoin was last at $19,396.45, up 0.81%.
"The big picture is that 2021 looks increasingly promising for global growth, and while the U.S. will
certainly be a part of that, the global reflation trade is going to support the risk-sensitive currencies
like the Australian dollar," said Westpac currency analyst Sean Callow.
"The dollar is likely to be in the group of laggards, along with the likes of the yen."

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Currency bid prices at 10:27AM (1527 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index =USD 90.5750 90.6960 -0.13% +0.00% +90.8240 +90.5340
Euro/Dollar EUR=EBS $1.2152 $1.2143 +0.07% +8.39% +1.2166 +1.2121
Dollar/Yen JPY=D3 103.7150 104.0450 -0.23% -4.43% +104.1450 +103.7500
Euro/Yen EURJPY= 126.02 126.33 -0.25% +3.34% +126.5800 +125.9600
Dollar/Swiss CHF=EBS 0.8869 0.8869 +0.02% -8.33% +0.8880 +0.8851
Sterling/Dollar GBP=D3 1.3377 1.3327 +0.38% +0.87% +1.3396 +1.3280
Dollar/Canadian CAD=D3 1.2738 1.2767 -0.22% -1.94% +1.2771 +1.2733
Aussie/Dollar AUD=D3 0.7540 0.7532 +0.11% +7.47% +0.7546 +0.7508
Euro/Swiss EURCHF= 1.0775 1.0769 +0.06% -0.71% +1.0785 +1.0759
Euro/Sterling EURGBP= 0.9083 0.9107 -0.26% +7.44% +0.9149 +0.9062
NZ NZD=D3 0.7075 0.7082 -0.07% +5.17% +0.7091 +0.7060
Dollar/Dollar
Dollar/Norway NOK=D3 8.7320 8.7320 +0.00% -0.46% +8.7530 +8.7165
Euro/Norway EURNOK= 10.6118 10.6310 -0.18% +7.87% +10.6375 +10.5939
Dollar/Sweden SEK= 8.3834 8.4000 -0.18% -10.31% +8.4202 +8.3772
Euro/Sweden EURSEK= 10.1878 10.2058 -0.18% -2.69% +10.2215 +10.1850



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