The dollar falls to its lowest in 2.5 years

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dollar

On December 30, the U.S. dollar declined to its lowest in more than two years in Asian trading and riskier currencies increased, as investors bet that global market risk appetite would rise in 2021.

As we know, on December 29, Mitch McConnell, U.S. Senate Majority Leader blocked a vote on boosting coronavirus relief payments to $2,000, adding another delay to fractious negotiations over fiscal stimulus.

However, the market sentiment was upbeat as investors remained optimistic that a fiscal stimulus deal will be eventually reached, reducing the demand for the safe-haven greenback.

According to analysts, the U.S. dollar will weaken further in 2021 as U.S. President Joe Biden is likely to push for even more measures to support the U.S. economy.

Additionally, on Wednesday, the risk-on moves in currency markets peaked in the Asian session, then eased off as European markets opened.

At 0816 GMT, the U.S. dollar declined by about 0.1% against a basket of currencies and settled at 89.895. Significantly, it dropped to as low as 89.711 overnight.

Meanwhile, the euro rose by at $1.226. The risk-sensitive Australian and New Zealand dollars witnessed gains. The Australian dollar increased y 0.6% and settled at 0.76457, while the New Zealand dollar reached two-year highs.

Against the Japanese yen, the U.S dollar declined by 0.2% and settled at 103.34.

The sentiment was buoyed as the UK approved vaccine

Significantly, in Europe, the sentiment was buoyed by Britain becoming the first country in the world to approve the coronavirus vaccine made by AstraZeneca and Oxford University.

The sterling increased versus the greenback and settled at $1.3538. Moreover, the British pound little changed against the euro.

Additionally, Eurozone government bond yields increased by around one basis point, with Germany’s benchmark 10-year yield at -0.56%.

Moreover, the world’s largest cryptocurrency witnessed massive gains in December as it hit a record high of $28,599.99.  During 2020, Bitcoin boosted by 295%, and analysts say that it could hit $30,000 in 2020.

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