The U.S. Dollar increased to its largest in two-months versus the euro and yen as data pointed to an improvement in the U.S. economic outlook. At the same time, risk appetite in global stock markets eased off.
U.S. Treasury yields boosted after ADP payroll data revealed an uptick in employment on Wednesday. Moreover, ISM data unveiled services industry activity in the United States increased to its highest in almost two years in January.
The U.S. dollar against the basket of other currencies boosted by 0.2% and stood at 91.298.
Furthermore, U.S. House of Representatives accepted a budget outline on Wednesday, which would allow them to pass Biden’s proposed $1.9 trillion COVID-19 aid plan without Republican support.
The euro briefly declined below $1.20, a level unseen since December 1.
Monetary policy changes are not likely
In the United Kingdom, the Bank of England’s meeting is in focus. Significantly, monetary policy changes are not likely. However, investors are waiting for comments on the economic rebound and the outcome of the bank’s consultation on negative rates.
Moreover, businesses in the United Kingdom has been hardly affected by a third national lockdown. They are grappling with post-Brexit barriers to trade with the European Union, after the UK left the bloc’s single market on December 31.
The British pound declined against the euro at 0825 GMT. Meanwhile, against the dollar, sterling stood at $1.2580, its lowest in a 17-day.
According to Commerzbank strategist, You-Na-Park-Heger, the pound could strengthen in the Bank of England keeps its critical stance on negative rates.
The risk-sensitive Australian dollar boosted by nearly 0.2% and settled at 0.76320 against the greenback. Meanwhile, the Norwegian crown declined by about 0.2%.
At 0836 GMT, the yen was down nearly 0.1% versus the greenback and stood at 105.180.
Furthermore, the dominant cryptocurrency, Bitcoin resumed rising and hit a 20-day high. Meanwhile, the second-largest cryptocurrency Ethereum increased to an all-time high and surpassed $1,600.