The Chinese yuan was stable at 7.0176 in onshore trading on Wednesday, stopping a two-day rally. Meanwhile, the Australian dollar traded flat at $0.6944. After Australia’s second-biggest city, Melbourne, reimposed pandemic lockdown measures on Tuesday, sentiment for the Aussie stayed weak.
The euro increased by 0.12% to $1.2870. A recent drop in selling positions against the dollar provided room for possible further drops. On the other hand, the sterling soared by 0.14%, last trading at $1.2560. However, the pound remained stable against the euro at 0.8988. The British currency steadied as the talks resumed Britain and the European Union in terms of their future trade relations.
On Wednesday, traders awaited a statement by British finance minister Rishi Sunak on his next moves to prevent a new wave of job cuts from further damaging a weakened economy. Meanwhile, the pound held onto a nearly three-week high.
According to Commerzbank foreign exchange analysts, what might look lethargic at first glance is probably based on the uncertainty about what will happen to the economy. They also stated that there are strong fears that Covid-19’s continued spread might quickly stifle this rebound. This could in turn would strengthen the U.S. dollar due to its status as a safe-haven currency.
Against the euro, the Norwegian krone was stable at 10.6940. New data showed that the economy rebounded in May after two months of sharp declines. It seems that a gradual reopening of businesses from the coronavirus lockdowns helped turn activity around.
How did the U.S. dollar fare?
The greenback declined slightly on Wednesday. It plummeted down by 0.13% against the Swiss franc, trading at 0.9414 francs. Traders weighed hopes for a fast economic recovery against concerns about a resurgence in the pandemic, especially in the United States.
Risk sentiment was undermined after Fed officials expressed concern that surging coronavirus cases could harm economic growth just as stimulus measures start to expire. Despite that, demand for the U.S. currency as a safe-haven lowered as oil prices eased on oversupply fears.