The Chinese Yuan hit a two-week high on Thursday. The currency skyrocketed to a two-week high of 7.0534 per dollar in the onshore market. Its rally was caused by new data showing factory activity in China had expanded for a second month straight in April. It seems the world’s second-largest economy is starting to recover from the crisis induced by the coronavirus pandemic slowly.
Chinese businesses are resuming work as the government eased the shutdowns related to the virus, which first emerged in the central Chinese province of Hubei late last year. Several other countries are also taking steps to re-opening their economies as infections slow, giving traders some cause for optimism.
The Australian dollar soared to a seven-week high of $0.6565 on Thursday. This is also a sign of improving risk sentiment among some investors. Meanwhile, the New Zealand dollar hit a six-week high as well.
What about the U.S. dollar and the Euro?
The dollar declined on Thursday after the Fed announced that more monetary easing is possible and dampened expectations for a fast economic recovery from the crisis. As the pandemic is receding in other countries, demand for safe-haven currencies weakened. That also has played a role in the dollar’s fall.
Positive trial results for a drug to treat COVID-19 boosted the appetite for riskier assets, such as the Aussie or New Zealand dollar.
The U.S. currency dropped slightly to 106.50 yen on Thursday, close to a six-week low. However, it was little changed at 0.9744 Swiss francs and stood at $1.2480 against the pound.
The U.S. Federal Reserve’s two-day policy meeting ended on Thursday. The Fed kept interest rates near zero, promising to expand emergency programs as needed to help the collapsed economy.
The Euro also lowered slightly to $1.0866 on Thursday. It fell by 0.26% to 87.08 pence against the pound. The Euro’s decline was due to the uncertainty about a European Central Bank meeting. Later on Thursday, policymakers will announce their decisions. They may expand debt purchases to include junk bonds, as well as take other steps to ease conditions in credit markets.