Australian and New Zealand dollars fell. What about Euro?

The Australian and New Zealand dollars declined from recent peaks in early trade on Tuesday. Before that, the Aussie reached a 10-month peak of $0.7040, and the kiwi jumped to a four-and-a-half month high of $0.6576. New Zealand ended all social restrictions after declaring the nation free of infections on Monday, which caused the currency’s rally. The sterling also hit a three-month high of $1.2755. However, all three currencies fell by mid-morning.

Australia has lifted most of its restrictions. And an ANZ survey of traffic movement reported a sharp rebound in heavy vehicle traffic in New Zealand last month. This is seen as an indicator of economic growth. Such changes bolster traders’ optimism. But the World Health Organization warned that the coronavirus pandemic is “far from over” on Monday.

The euro last traded at $1.1304 and the pound at $1.2736. It seems the optimistic sentiment wasn’t enough for new rallies. FX markets avoided big moves while waiting for the outcome of the Fed meeting. According to Yukio Ishizuki, the foreign exchange strategist at Daiwa Securities in Tokyo, the U.S. dollar is under selling pressure.

How did the U.S. dollar fare?

The greenback tumbled down on Tuesday. The Fed’s statement was due on Wednesday, and investors’ trepidation over the U.S. Federal Reserve’s next move caused the currency’s decline. Traders didn’t expect the agency to change interest rate settings.

Meanwhile, U.S. jobs data for May showed an unexpected increase in employment last week. After such job figures, futures pricing indicates that investors have abandoned expectations of rates dipping below zero. Chinese export numbers for last month were also higher than forecast.

The Japanese yen jumped to a week-high of 108.03 per dollar while traders considered the possibility of higher bond-buying from the Fed. Economies are smashed, but not smashed as badly as was expected – noted Imre Speizer, Westpac FX analyst in Auckland. He believes that’s the key to a new rally.