The Japanese yen stood at 107.28 yen per dollar on Wednesday. It changed insignificantly after the Bank of Japan kept monetary policy steady. The bank maintains its stance that the economy would gradually recover from the COVID-19 pandemic.
On the other hand, the risk-sensitive Australian dollar climbed up by 0.24% to $0.6992. The onshore yuan also edged up by 0.05% to 7.0040 per dollar.
However, tensions are rising between the U.S. and China. According to Ayako Sera, the senior market economist at Sumitomo Mitsui Trust Bank, there are some doubts about whether Hong Kong will remain an open market. But investors think this is a very long-term issue.
The Euro skyrocketed to a four-month high against the dollar. Traders were hopeful that European Union leaders might agree on additional stimulus to help countries recover from the pandemic.
The common currency soared to $1.1400, after climbing up to its highest level since March 10 at $1.1423 earlier in the trade. It also rallied to a one-month high of 122.47 against the Japanese yen.
Furthermore, the Euro soared to a two-week high of $0.91125 British Pound the previous day, the last trading at 90.690 pence.
On the other hand, the British Pound lowered after data showed Britain’s economy was rebounding more slowly than forecast. The Sterling last traded at $1.2567.
How did the U.S. dollar fare?
The dollar struggled against other growth-leveraged currencies, such as the Aussie, on Wednesday. U.S. inflation rose, and with the addition of the news of progress in vaccine development for COVID-19, caused the greenback to fall further.
The dollar index plummeted down to a one-month low at 96.056. The U.S. currency extended losses on Tuesday after U.S. consumer prices rebounded by 0.6% month-on-month in June. Such data eased worries about deflationary pressures from the economic downturn. On Wednesday, the dollar index stood at 96.225.
Germany, Italy, and France had all taken severe lockdown measures – stated Bart Wakabayashi, Tokyo Branch Manager of State Street Bank and Trust. As a result, coronavirus appears to be under control now, and the economy could be gradually recovering.