The U.S dollar dropped in value at mid week’s trading session on Wednesday.
The plunge has put the greenback near its lowest levels in two and a half years as currency traders increase their U.S dollar outflows on the bias that the world’s largest economy will resume stimulus talks thereby increasing risk appetite.
At about 6.06 am GMT, the U.S. Dollar Index traders use in tracking the greenback’s relative strength against a basket of other major currencies dipped lower by 0.11%. The U.S dollar index hit 91.263, its lowest level since April 2018, overnight.
US House of Representatives, Speaker Nancy Pelosi and U.S. Treasury Secretary, Steve Mnuchin held their first discussion for the latest stimulus deal since the U.S presidential elections. The U.S Treasury Secretary is anticipated to proposed $908 billion worth of measures laid out by both political parties, said the U.S House Speaker.
Also, the Senate leader, Mitch McConnell recently disclosed that a fresh wave of measures including a $1.4 trillion spending bill, aimed at stopping a government shutdown amid COVID-19 kept the pressure on the U.S dollar, as global investors saw it has an opportunity to divert their holdings to risker assets like global stocks
What you should know: The U.S. Dollar Index tracks the greenback against a basket of major global currencies such as the Japanese yen, British pound sterling, Swedish Krona, Euro, etc. Individuals hoping to meet foreign exchange payment obligations via dollar transactions to countries in Europe or Japan would need to pay more dollars in fulfilling such payment obligations.
Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics, spoke on the U.S dollar arch-rival performance amid the pending EU summit in play.
“The Euro surged higher overnight on an assortment of reflation libations that rocket-fuelled the global growth upswing narrative, specifically early vaccine approvals, and US stimulus optimism. Also, Brexit negotiations went into the ‘tunnel’? according to news reports, although there has not been any confirmation yet.
“For now, it should be treated with caution, particularly as this still does not mean the political hurdles will be overcome. What is clear is that the most decisive few days now lie ahead. On both sides, general assumptions are that a deal needs to be done by next week’s EU Summit on Dec. 11/12, so there is still room for a calamitous tumble, but a more unlikely than not,” Innes said.