Today, at the beginning of European trading, the US dollar fell to multi-year lows. This is largely due to the growing confidence of investors in the adoption of a new large-scale stimulus package in the United States. Reaching a Brexit deal added to the optimism of market participants, which ultimately increased their risk appetite. Traders actively began to sell off the safe asset all over the world.
The dollar index, which tracks its exchange rate against a basket of six other currencies, lost 0.4% to 89.91, down from March 2018.
The USD/JPY pair fell by 0.3% to 103.22. The EUR/USD rose by 0.3% to 1.2230. The risk-sensitive AUD/USD pair rose by 0.5% to 0.7614. The GBP/USD pair rose by 0.5%, which is supported by the growing positive attitude towards the Brexit trade deal. The head of the European Commission said yesterday that the deal is about to take place, however, it does not guarantee a confident success in this matter.
In the US Congress, its participants also can not reach an agreement on a new bill to combat COVID-19, although it is worth recognizing that members of the Democratic and Republican parties last Wednesday looked more peaceful and positive than a few months earlier. These protracted negotiations to date relate mainly to the nuances related to the $ 900 billion state aid package to combat COVID-19. It is expected that this package will include incentive checks for $ 600-700, as well as higher unemployment benefits.
There is optimism on all sides: fiscal stimulus to help the battered economy is expected in the near future, and the US Federal Reserve intends to maintain monetary financing until progress is made on its recovery. Against the background of such news, the US dollar has almost no chance to get out of the hole in which it has fallen. Assets such as the euro and gold began to enjoy brisk demand in many markets. Analysts predict that in the coming months, the value of the dollar may fall by another 15%. According to experts from Citigroup, in 2021, the dollar risks falling by 20%, which will largely ensure widespread and mass vaccination against coronavirus, designed to revive world trade and ensure strong economic growth.
