As everybody was expecting, considering the tensions in the United States, the dollar lost significant ground, thus allowing the euro to reach an 11-week high, while investors are still looking forward to a global economic recovery.
To be more specific, traders believe that central banks will keep buying government bonds, as well as many other financial assets, in an attempt to protect their economies from the effects of the COVID-19 lockdown.
Banks, to give economies a hand
One example is the European Central Bank, which is expected to increase its Pandemic Emergency Purchase Programme, worth 750 billion euros so far, this Thursday, with another 500 billion euros.
The Bank of Japan, ECB, and the Federal Bank revealed that they have increased their balance sheets by 10, 20, and 70 percent ever since the start of 2021, according to Societe Generale’s macro strategist, Kit Juckes.
Back to the Euro, it last fetched $1.1178, up 0.4% on the day, after reaching an impressive $1.1185, its highest value since March 17. On the other hand, the USD fell to a three-month low or 1.3503 against the Canadian dollar, while against the Australian dollar it also fell.
Investors remain optimistic
“The strengthening of the commodity-linked currencies and the weakening of the safe havens suggests that investors’ appetite remained supported for another day,” declared Charalambos Pissouros, senior market analyst at JFD Group.
“It seems that investors continued placing bets on the prospect of a global economic recovery as governments around the globe continue to ease their lockdown measures,” he added.
The United States Dollar managed to fall about 5%, following a peak hit in March, when the entire panic created by the COVID-19 pandemic gripped a lot of the world’s financial market, thus forcing investors to scramble, just for the safety of dollars.