Dollar Recovers After Early Weakness, But Struggles To Hold Gains
After extending losses from previous session, the U.S. dollar rebounded in late morning trades on Wednesday, gaining a bit of ground against some of its peers.
A sell-off in the stock market pushed up the dollar, but the currency’s gains were capped due to hopes about economic recovery following the rollout of coronavirus vaccine, and on optimism about a fiscal stimulus.
The dollar index, which was languishing in the red around 90.70 in the Asian session, rose to 91.20 around early afternoon before paring some gains. It was last seen hovering around 91.05, up marginally from previous close.
Against the Euro, the dollar firmed up to $1.2083, gaining 0.19%.
The Pound Sterling was stronger, fetching $1.3402 a unit, about 0.33% more than Tuesday’s close of $1.3358. The Pound strengthened as the U.K. and the European Union reached agreement on the Northern Ireland protocol and investors awaited today’s meeting between PM Boris Johnson and European Commission president Ursula von der Leyen to break the impasse in Brexit talks.
The UK Government dropped controversial plans that breached the Brexit Withdrawal Agreement to help improve relations with the EU and increase the chances of a trade deal.
The Yen, which fell to 104.40, recovered to 104.24 a dollar, but was still down compared to previous close of 104.17. Data from the Cabinet Office showed that Japan core machine orders jumped a seasonally adjusted 17.1% on month in October – coming in at 842.5 billion yen. Expectations were for a gain of 2.8% following the 4.4% drop in September.
The Aussie was stronger against the dollar, with the AUD-USD trading at 0.7441, about 0.4% up from $0.7411.
The Swiss franc and the Loonie were down slightly against the dollar at 0.8895 and 1.2820, respectively.
The Bank of Canada today left its target for the overnight rate at a record low of 0.25%, in line with expectations. The bank also maintained its extraordinary forward guidance, reinforced and supplemented by its quantitative easing program, which continues at its current pace of at least C$ 4 billion per week.
The material has been provided by InstaForex Company – www.instaforex.com