The dollar tumbled down to a nine-day low on Thursday. After robust U.S. data and hopes for U.S. fiscal stimulus, investors turned to riskier currencies boosted the optimistic sentiment.
The Chinese yuan rallied the most against the greenback, reaching a year-and-a-half high in the offshore market. On Wednesday, Chinese data showed its economic recovery was on track and a holiday in the country dried up liquidity, thus exaggerating the moves.
The Australian dollar and the Norwegian crown jumped versus the dollar as well. Jeremy Stretch, the head of G10 FX strategy at CIBS, stated that there’d been a dent in liquidity, which usually amplifies market moves. However, thus far, there has been a generalized risk-on bias on optimism of a stimulus package in the U.S.
Stretch also added that there’s a little race for Congress to get something in the books before they leave for the recess for the election. If airlines talk about laying off more than 30,000 workers, that doesn’t help your cause going into the election if you’re the incumbent.
So, President Donald Trump’s administration has proposed a Covid-19 stimulus package to House Democrats worth more than $1.5 trillion. Traders hope that both parties will reach a compromise.
What’s happening in the markets in Europe and Asia?
The eurozone manufacturing recovery increased last month, according to the final reading of the manufacturing PMI. Despite that, official data showed unemployment across the region jumped to 8.1% in August.
The euro has traded at $1.1765, which is higher by 0.4% on Thursday, hitting its highest point since Sept. 22. The common currency rose after European Central Bank member declared that the central bank wasn’t under pressure to ease policy.
The Australian dollar also gained 0.5% at $0.7204, its highest point since Sept. 22. Meanwhile, the Norwegian crown soared by 0.7% at 9.2605 versus the dollar, reaching a 10-day high. The Chinese yuan also added 0.7% to 6.7330.
The British pound climbed up by 0.3% against the U.S. dollar at $1.2957. Sterling also added 0.1% versus the euro to trade at 90.78 pence.