Dollar Falls Amidst Optimism over Pandemic Aid

On Tuesday, the dollar fell to almost two-and-a-half-year lows, as investors were prompted to take more risks with US lawmakers pushing forward with an enhanced package for the US coronavirus relief. On Monday, the House of Representatives had voted to boost stimulus payments to individual Americans from the previously agreed-upon value of $600 to $2,000, and this measure was sent on to the Senate for voting. The Brexit agreement that was made late last week, may have been bare-bones, but it also gave support to the outlook for global recovery and growth. Therefore, Asian stocks saw a boost on Tuesday, after gains were seen on Wall Street.

Market analysts said that there was optimism all over and most of it was coming from the equity markets. However, they did add that the US dollar was on the heavy side and this was not expected to change in the coming year either. There was a 0.1% fall in the dollar index in holiday-timed trading, as it reached a value of 90.125. This brought it close to the level of 89.723 that it had reached for the first time since April, 2018, on December 17th. Based on the data that had been released on Monday by the Commodity Futures Trading Commission (CFTC) and calculations, there had been a major increase in the short positions on the US dollar to $26.6 billion in the week that ended on December 21st.

There was a 0.2% increase in the euro to $1.22375 in the Asian trading session, which brought it to the two-and-a-half-year highs that it had reached earlier this month at $1.22735. There was little change in the US dollar against the Japanese yen, which is another safe-haven currency, as the greenback was trading at 103.695 yen. There was also a 0.2% gain in Sterling to $1.3484 after a decline in the last two days.

This month, the British pound had climbed to as high as $1.3625, a level that it hadn’t hit since May 2018. Nonetheless, investors were able to make some profits after the Brexit trade agreement announcement late last week. Analysts said that while this deal was certainly a relief, it was also a fact that Britain had not become a lot more detached from the European Union. They also said that people were still trying to evaluate what this deal meant, due to which there is some pressure on the pound.

The problem is the lack of agreement about how financial markets will be left with, which is definitely not in favor of the United Kingdom. There were 0.2% gains in the Australian dollar, pushing it to 75.927 cents, while 0.3% gains were also seen in the New Zealand dollar, which pushed it to 71.19 cents. There was also gains of 0.2% in the Chinese yuan in the offshore market, as it reached 6.5192 against the dollar, while the onshore market saw it change hands at 6.5310 per dollar. There was a 2.4% drop in Bitcoin, as it fell to $26,367.