The dollar declined slightly on Wednesday as traders weighed hopes for a swift economic recovery against concerns about a resurgence in the pandemic, especially in the United States.
Demand for the greenback as a safe-haven lowered as oil prices eased on oversupply fears. However, risk sentiment was also undermined after Fed officials expressed concern that surging coronavirus cases could harm economic growth just as stimulus measures start to expire.
The euro rose by 0.12% to $1.2870. Meanwhile, a recent plunge in selling positions against the dollar provided room for possible further drops.
Commerzbank foreign exchange analysts noted that what might look lethargic at first glance is likely based on uncertainty about what will happen to the economy.
According to them, there are strong fears that coronavirus’ continued spread might quickly stifle this rebound again. This in turn would strengthen the greenback due to its status as a safe haven.
The dollar tumbled down by 0.13% against the Swiss franc, trading at 0.9414 franc. On the other hand, the sterling jumped by 0.14%, last trading at $1.2560. Still, the pound was stable against the euro at 0.8988. Talks resumed Britain and the European Union in terms of their future trade relations, steading the British currency.
The pound maintained a nearly three-week high. On Wednesday, investors awaited a statement by British finance minister Rishi Sunak about his next moves to prevent a wave of job cuts from further damaging a weakened economy.
What about the Norwegian Krone and Asian currencies?
The Norwegian krone was stable at 10.6940 versus the euro. According to new data, the economy rebounded in May. This was after two months of sharp declines while gradual reopening of businesses from the pandemic lockdowns helped turn activity around.
The onshore Chinese yuan was also steady at 7.0176, stopping a two-day rally. The Australian dollar traded flat at $0.6944. At this time, sentiment for the Aussie stayed weak after Australia’s second-biggest city, Melbourne, reimposed pandemic lockdown measures on Tuesday.
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