The dollar fell on Thursday after the Fed announced that more monetary easing is possible. Investors fear that a fast economic recovery from the crisis won’t be the case. Still, the pandemic is receding in other countries and demand weakened for safe-haven currencies, the dollar among them.
The U.S. currency was little changed at 0.9744 Swiss francs and stood at $1.2480 against the pound. However, it dropped slightly to 106.50 yen on Thursday, close to a six-week low.
The U.S. Federal Reserve’s two-day policy meeting ended on Thursday. The Fed promised to expand emergency programs as needed to help the collapsed economy and kept interest rates near zero for now.
On the other hand, after positive trial results for a drug to treat coronavirus, the appetite rose for riskier assets, such as the Aussie or New Zealand dollar.
The Australian dollar hit a seven-week high of $0.6565 on Thursday. And the New Zealand dollar hit a six-week high as well. These are also signs of improving risk sentiment among some investors.
Meanwhile, the euro declined slightly to $1.0866 on Thursday. It fell by 0.26% to 87.08 pence against the pound. The euro’s fall was due to the uncertainty about a European Central Bank meeting.
What about the Chinese Yuan?
The Chinese Yuan skyrocketed to a two-week high on Thursday. The currency surged forward to 7.0534 per dollar in the onshore market. New data showed that factory activity in China had expanded for a second month straight in April, causing Yuan’s rally. It seems the world’s second-largest economy is starting to recover from the coronavirus crisis slowly.
The Chinese government eased the shutdowns related to the virus, which first emerged in the central Chinese province of Hubei late last year, and the businesses are resuming work. Several other countries are also taking steps to re-opening their economies as infections slow, giving traders some cause for optimism.