The Euro climbed up by 0.2% at $1.1355 on Thursday despite German export data failing to meet analysts’ expectations. The currency skyrocketed to a one-month high of $1.1371 during the previous sessions.
The British pound also surged forward by 0.3% to $1.2647, reaching a three-week high. Meanwhile, the Swedish and the Norwegian crowns rallied to a one-month high against the dollar, trading at 9.15 and 9.35, respectively. The New Zealand dollar soared to $0.6590, its highest since late January.
Furthermore, the Chinese yuan hit a four-month high against the U.S. dollar, strengthening recent gains. The yuan skyrocketed to a four-month high of 6.9808 in the offshore market and traded higher by 0.2% against the greenback by the end.
Traders increased positions in Chinese stocks due to amassing signs of an economic recovery in the world’s second-largest economy. The yuan has been a star performer as traders ignored diplomatic tensions between Washington and Beijing. They were mostly focused on China’s improving economy as well as its attractive technology sector.
Overall, the Chinese currency has soared by almost 2.3% from a seven-month trough versus the dollar beginning on May 27.
What do experts think?
Analysts have seen a more generalized view back to riskier assets. So far, the Chinese equity rally has been the poster child for the risk-on move across the last few sessions – stated Jeremy Stretch, the CIBC Capital Markets’ head of G10 FX strategy. So far, Chinese stocks continue their recent surge. On Thursday, the CSI300 index rallied to a five-year high.
Stretch thinks that traders’ bias for the current quarter is 2% to 3% dollar depreciation, and they see no reason to change that. The dollar should lower as the Federal Reserve supply increases, while the Euro is poised for some upside gains on the back of the expected eurozone recovery fund.
On Thursday, the greenback plummeted down against most currencies, while riskier assets, such as global equities and commodities, rallied. Safe-haven demand for the U.S. currency lessened significantly.
- Interested in trading the British pound? Read WiBestBroker’s comprehensive review on FXChoice.