The U.S. dollar plummeted down near multi-year lows against most major currencies on Tuesday. Before that, the dollar index plunged on Monday to a two-year low at 91.989 against a basket of six major currencies. The Fed’s new policy framework continued to bolster bets that U.S. rates will stay much longer than other countries.
During this week, the U.S. data calendar is full of important releases on durable goods, manufacturing, and employment. However, analysts think that positive results may not halt the dollar’s decline due to strong expectations that rates will continue to remain extremely low.
Minori Uchida, the head of global market research at MUFG Bank in Tokyo, stated that the dollar is week both against G10 currencies and emerging market currencies. According to the analyst, this shows the greenback is in a downtrend that will last for some time.
The dollar stood at $1.1938 against the euro on Tuesday in Asia, close to its lowest since May 2018. Meanwhile, the British pound bought $1.3365. That is near its strongest level in almost a year. The dollar traded at 0.9040 Swiss francs, slightly above the lowest point in more than five years. But the greenback was steady at 105.94 yen.
How did the Aussie and the kiwi trade?
Several risk-off currencies rallied. The Australian dollar traded near a two-year high against the greenback. Investors are waiting for the Reserve Bank of Australia policy meeting that is due later on Tuesday.
The Aussie stood at $0.7381 as traders didn’t expect the RBA to make any major changes at a policy meeting today. However, they want to see how central bankers assess the economic outlook as the country struggles with a recent increase in Covid-19 cases. The New Zealand dollar was steady at $0.6740, near its strongest point in two years.
The Japanese yen moved into a narrow range as politicians tried to choose a new premier after Prime Minister Shinzo Abe’s shock resignation last week.