The British pound was steady on Wednesday, trading at around $1.2576, below a three-month high of $1.28 hit earlier in June. Brexit’s developments hobble the Sterling.
Meanwhile, the Euro stopped rising due to the U.S. Federal Reserve’s cautious message. The currency traded below the three-month high of $1.1422 reached last week. It stood at $1.1286 on Wednesday after skyrocketing by almost 5% since a Franco-German proposal for a recovery fund in late May.
The U.S. dollar lowered by 0.1% to 96.89 against a basket of other currencies. The broad outlook was pessimistic on the markets due to rising coronavirus cases. As a result, the dollar index has bottomed out after reaching a three-month low last week.
They record high rates of virus infections in six U.S. states, China and Brazil. On Tuesday, China pulled up restrictions on people leaving Beijing to stop the worst coronavirus flare-up since February from spreading. Clashes between Indian and Chinese troops in the western Himalayas also undermined optimistic sentiment.
According to new data, U.S. retail sales soared more than expected in May. Despite that, caution kept traders from aggressively buying riskier currencies, such as the Australian or New Zealand dollars.
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What did Jerome Powell announce?
U.S. Federal Reserve Chairman, Jerome Powell, simultaneously doused some of the market’s optimism and reinforced hopes for continued policy support. He painted a bleak picture of the U.S. economy on Tuesday. It seems a rebound won’t be fast and easy.
According to Powell, a full U.S. economic recovery would not occur until the American people are sure the novel coronavirus epidemic has been brought under control. However, that remains far from certain, considering that new coronavirus infections jumped to record highs in U.S. states on Tuesday.
Meanwhile, Kazushige Kaida, the head of FX sales at State Street, stated that investors are waiting to see how critical the impact of a second wave of infections on the economy will be. The length of time people are holding their positions is getting shorter.
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