According to the latest news, riskier currencies such as the commodity-link Canadian dollar, Australian dollar, and the Norwegian crown declined to multi-week lows versus the American currency. Significantly, souring risk sentiment in global markets increased the dollar.
Furthermore, declining stocks on Wall Street on January 27, in Asia overnight, and at the open in Europe contributed to a shift in sentiment.
At 0852 GMT, the U.S. dollar was 0.14% up against a basket of other currencies. The greenback boosted against the Australian dollar. It fell as much as 0.8% and was traded at stood at 76.02 U.S. cents. Its peer New Zealand dollar fell 0.5% and settled at 71.22 U.S. cents.
Meanwhile, the Canadian dollar reached its lowest in a month, falling to 1.286 per U.S. dollar.
The Norwegian crown dropped to its lowest in five weeks and traded at 8.7266 per greenback. In early trading in London, Norway’s crown declined as much as 0.8%.
Moreover, analysts remark that some of the optimism around vaccines fuelling a rebound in the global economy has faded. In several countries, especially some in Europe, they have been slow to roll vaccines out and have met difficulties.
Furthermore, the European Union, which is far behind the United States, China, and the United Kingdom in deploying a vaccine, asked AstraZeneca to make clear how it would supply the bloc with reserved doses of coronavirus vaccine from plants in Europe and Britain.
On Tuesday, the United Kingdom announced it must receive all of the coronavirus vaccines it had ordered and paid for.
Federal Reserve left its benchmark overnight interest rate near zero
According to a senior analyst at Danske Bank, Lars Sparreso Merklin, the story of weakness in the European rebound continues.
Additionally, the Federal Reserve on Wednesday left its benchmark overnight interest rate near zero and guaranteed to continue adding money into the economy through bond purchases. The Federal Reserve announced the recovery pace in economic activity and employment has moderated in the last months.
Moreover, the euro declined by 0.2% and hovered below $1.21 after reaching its lowest in over a week versus the greenback.
European Central Bank policymakers have stepped up their mentions of the euro in the last weeks. The most recent comments suggested that the ECB could even cut its deposit rate to check the euro’s strength.
The British pound declined by 0.4% and settled at $1.3637.