Asian currencies rallied along with Euro and Sterling

The U.S. dollar declined against several Asian currencies on Wednesday. Investors turned to riskier currencies as prospects of more government stimulus, and a global economic recovery boosted their hopes.

The Australian dollar skyrocketed to a five-month high against the dollar, surging forward by more than 1% to $0.6982, its highest point since January 3. Yukio Ishizuki, the FX strategist at Daiwa Securities in Tokyo, stated that the Aussie has a lot of room to run as there are still a lot of shorts that need to be covered. The economic recovery story is the main factor.

According to traders, sentiment has turned bullish for the Australian dollar because lockdown restrictions are easing, and commodity prices are rising. The New Zealand dollar also jumped to $0.6430, reaching its highest point since March 9.

Meanwhile, China’s yuan climbed up after a private survey showed that the country’s services sector returned to growth. On Wednesday, the yuan briefly reached its strongest point since May 13 in onshore trade. However, it settled at 7.1068 per dollar. According to the Caixin/Markit services Purchasing Managers’ Index, China’s services sector returned to growth in May for the first time since January.

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What about the U.S. dollar?

The greenback fell not only versus the Asian currencies but against European ones as well. The British pound, the yen, and the Swiss franc rose against the dollar as traders contemplated mass protests against racism spreading across the U.S.

The U.S. dollar is generally weak – stated Yukio Ishizuki. It lowered against safe-haven currencies and tumbled down to a one-month low of $1.2615 against the British pound.

The greenback bought 0.9613 Swiss franc, dropping close to a two-month low. Against the Japanese currency, the dollar plummeted down to 108.47 yen.

Meanwhile, the euro bought $1.1186 in Asia, close to its highest point since March 16. Investors hope that policymakers will support the eurozone’s weakest economies.