By Peter Nurse
The dollar rebounded slightly at the beginning of the european session on Thursday, but remained stuck near its lowest level since two years after the federal Reserve kept its dovish position by committing to support the u.s. economy against the ravages of the pandemic of Covid-19.
At 11: 30, the Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.1% at 93,570, going back a bit to the level of 93,273 saw earlier, its lowest level in more than two years.
USD/JPY rose 0.2% to 105,07, GBP/USD fell 0.1% to 1,2988, just below the highest level enr 4 and a half months of 1,3006$ reached on Wednesday.
EUR/USD fell 0.4% to 1,1747, after passing is 1.18 for the first time in two years. The single currency is poised to record its strongest monthly increase since 10 years, with an increase of nearly 5% this month.
The u.s. federal Reserve concluded its latest two-day meeting later Wednesday, in keeping interest rates near zero and committing to maintain an accommodative monetary policy for an extended period of time.
The general policy statement of the central bank was also directly related to the economic recovery at the end of the health crisis due to the coronavirus. In effect, the United States have surpassed the 150 000 deaths recorded by the Covid-19 Wednesday, several States have recorded their largest number of deaths.
The us epidemic has intensified since June, with an average of about 65 000 new cases detected each day, hampering the rebound in economic activity. This situation has exhausted the support of the greenback, as investors have begun to doubt whether the u.s. economic growth to rebound more quickly and more strongly than most other countries.
Economic data expected next Thursday should show a decline from a record 34 percent of gross domestic product (annualized) in the last quarter, while unemployment claims should show a higher number of people requesting unemployment benefits last week.
The Fed chairman Jerome Powell, and his FOMC colleagues “are clearly more concerned about the economy than they were there only a month,” said Diane Swonk, chief economist at Grant Thornton. “The resurgence of cases of COVID and the impact that this has on the economy, provoke their anxiety. Powell is ready to do more, but it is limited and needs that the Congress is committed, and to provide more assistance as soon as possible”.
During this time, the republicans and democrats continue to negotiate the last stimulus of the country, and there remains only a day before the expiry of certain stimulus measures earlier.