On Wednesday, the bloc’s common currency euro had extended its gain against the American Dollar, harbouring just a notch shy of its two-year peak, while the Aussie and Kiwi had also wrapped up the day sharply higher as risk-on moves continued following a massive eurozone stimulus bill passed a day earlier.
In point of fact, Wednesday’s collapse of the US Dollar was largely prompted by a number of nefarious attempts from the Trump Administration including an escalation of Sino-US trade spat after the United States had told China to shut down its consulate in Houston over accusations of alleged espionage.
Nonetheless, despite the deterioration in relationship between Washington and Beijing, the FX market mood remained largely optimistic as the EU agreement of a €750 billion pandemic relief bill alongside encouraging signs in global-scale demands had helped the eurozone’s single currency to log its fourth straight session of gain against its American counterpart.
US Dollar unlikely to gather momentum in a near-term outlook, say analysts
Citing statistics, on Wednesday’s late-afternoon FX market trading, euro had been up by 0.37 per cent against the greenback to $1.1569 after hitting an intra-session high of $1.1601, its highest level since October 2018, while the US Dollar Index (DXY) measured against a basket of six major currencies, had foundered 0.2 per cent to 94.93.
Beside the South Pacific, the Australian Dollar added 0.2 per cent to $0.7142 and the Kiwis rose by 0.3 per cent to $0.6664 against their American peer. Concomitantly, adding that a garrulous debate in the Capital Hill over another round of trillion-dollar pandemic stimulus alongside an escalation in Sino-US relationship had inflicted deeper wounds into the US Dollar bullions, Axel Merk of Merk Investments in Palo Alto, CA, said, “This is part of global reflation and maybe the multiyear bull market in the dollar has come to an end.
The dollar is weak and the key reason for that is real interest rates in the U.S. are low and are promised to go lower. ”