The U.S. dollar was on track for a weekly loss on Friday’s trading due to the Fed’s new program. U.S. Federal Reserve announced its massive lending scheme to help small companies. Signs of a slowdown in coronavirus infections also reduced safe-haven demand and weakened the dollar.
The Fed issued a $2.3 trillion program to offer loans to local governments and mid-sized or small businesses on Thursday, the latest attempt to backstop the U.S. economy as the country fights the coronavirus crisis.
Junichi Ishikawa, the senior FX strategist at IG Securities in Tokyo, stated that the Fed had taken a lot of different measures to increase the supply of dollars. According to the analyst, the end result of the Fed’s actions is gradual weakening in the dollar.
The greenback last stood at $1.0930 against the euro, on course for a 1.2% weekly decline. And the dollar was down 1% against the Swiss franc, trading at 0.9660. Against the Japanese yen, the latest indicators show that U.S. currency has traded lower at 108.51 yen.
Meanwhile, the pound strengthened after British Prime Minister Boris Johnson left intensive care following his hospitalization for coronavirus symptoms. It surpassed the dollar and the euro. It held steady at $1.2465 on Friday, heading for a 1.6% gain this week. The Sterling was on course for its third consecutive weekly gain against the euro.
So far, currencies from oil-producing countries also maintained their strength against the U.S. dollar. However, an agreement between Saudi Arabia and Russia to cut oil supply has failed to decreased concern about massive oversupply, causing the traders uncertainty.
What about the Aussie and the Canadian dollar?
The Australian dollar jumped by 5.5% against the greenback this week, as the stress is easing in global markets. The Aussie is highly sensitive to risk sentiment because of Australia’s dependence on the global commodities trade and China.
Meanwhile, the Canadian dollar, the Russian ruble, and the Norwegian crown were all higher against the U.S. dollar this week, but further gains are doubtful.