The Australian dollar soared against the U.S. dollar on Wednesday, rising by 0.4% at $0.65200. It seems oil-linked currencies are gaining once more. JFD Group’s senior market analyst, Charalambos Pissouros, noted that the weakening of the greenback, as well as the strengthening of the commodity-linked currencies, suggests that risk appetite may have stayed supported for the near future.
The euro also climbed up by 0.3% to $1.08545. Traders were waiting for the outcome of the European Central Bank meeting on Thursday, avoiding the sharp moves.
On the other hand, the U.S. dollar lowered by 0.2% to 99.73 against the basket of currencies. The high-yielding currencies soared as the governments are partially lifting coronavirus lockdowns. While the greenback almost reached two-week lows against its rivals.
What’s the mood on the Forex markets currently?
Traders were on a lookout for the results of a U.S. Federal Reserve meeting on Wednesday. As a result, currency markets have been mostly in a wait-and-watch mode. Policymakers promise to do whatever it takes to support the world’s largest economy, but the investors are still wary.
According to experts, the U.S. economy may expand by 3.8% in 2021. The U.S. quarterly GDP numbers are due to be released soon, and consensus forecasts for a contraction are around 4%. Analysts are currently focusing on the extent of recovery in the coming months.
Central banks launched massive stimulus measures worldwide to protect economies from the novel coronavirus pandemic, causing the dollar’s rally. However, the currency has lowered by more than 3.5% after climbing a more than a three-year peak of 102.99 in late March.
Policy response from the Fed has been very aggressive – noted Lee Hardman, the currency analyst at MUFG. He thinks that the Fed will continue to keep the money taps on to reduce the risk in financial markets. While the markets probably see a pick up in activity towards the end of the second quarter.