Dollar falls to multi-year lows
The dollar sank to fresh 2-1/2-year lows against major peers including the British pound and euro on Wednesday as progress towards agreeing a U.S. stimulus package and a Brexit deal boosted risk appetite at the expense of the safest assets.
Congressional negotiators are getting closer to agreeing a $900 billion COVID-19 aid bill, lawmakers and aides said on Wednesday, with the tone the most positive it’s been in months. With this in the offing the market is now in risk on mode with the global growth looking more optimistic for 2021. This could lead to further Dollar weakness in the future as it sheds it safe haven status.
The Federal Reserve on Wednesday vowed to keep funneling cash into financial markets until the U.S. economic recovery is secure, a promise of long-term help that fell short of some investors’ hopes of an immediate move to shore up a recent pandemic-related slide.
The pound rose against the dollar to its highest level since May 2018 as it gained by over a cent after European commission president Ursula Von Der Leyen told MEPS ” There is a path to an agreement now”.
Even after these positive comments were made the UK looked to play them down. While talks for a trade deal have progressed, fishing rights remain a particular sticking point as the UK prepares to exit the trading bloc at the turn of the year. British Prime Minister Boris Johnson’s aide said on Wednesday that no deal was still the most likely outcome.
With this in mind media reports concerning the status of talks suggest that the two sides have more or less squared away the issue of level playing field provisions, leaving a final compromise to be made on fisheries.
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