The Canadian dollar plummeted down to a three-week low on Wednesday. However, it steadied in Asia later as traders awaited a Bank of Canada policy decision.
The Norwegian krone also declined, hitting a more than the six-week low of 9.1840 per dollar. The oil price plunged overnight and dragged down oil exporters’ currencies with it. Thus far, investors expect no changes to interest rates.
On Wednesday, the Euro steadied at $1.1772 as investors awaited Thursday’s European Central Bank meeting with some trepidation.
The common currency has tumbled down by about 2% since hitting a 28-month high above $1.20 at the beginning of the month. According to ECB chief economist Philip Lane, the exchange rate mattered to monetary policy, causing the currency’s downfall.
Meanwhile, the British pound dropped by 0.2% to $1.2950, its lowest since the end of July. Furthermore, the Sterling fell to a six-week low of 90.57 pence against the Euro and 137.04 versus the Japanese yen. The British currency traded under pressure as investors feared that Britain is preparing to undercut its future trade agreement with the EU.
How did the U.S. dollar fare?
The dollar soared by almost 2% against a basket of currencies, surging from the more than two-year lows it reached earlier in the month. The Japanese yen hit a one-week high of 105.83 per dollar as well.
Traders turned to the safe-haven currencies after the stock market’s slide. They sold riskier currencies and bought the greenback and the yen. As a result, the dollar found support after trading in the red for the last few days.
The tech sell-off had caught the market by surprise. It is a bit jittery as to whether there are broader implications – stated Moh Siong Sim, the currency analyst in Bank of Singapore.
Nonetheless, several risk-sensitive Antipodean currencies edged up from two-week lows with the futures trade. The Australian dollar added 0.2% at $0.7226, while the kiwi traded steady at $0.6621.