Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Dollar on back foot as Biden optimism bolsters riskier currencies

Published 21/01/2021, 01:50
Updated 21/01/2021, 01:50
© Reuters. FILE PHOTO: A picture illustration shows U.S. 100 dollar bank notes

© Reuters. FILE PHOTO: A picture illustration shows U.S. 100 dollar bank notes

By Kevin Buckland

TOKYO (Reuters) - The dollar held losses versus most major peers on Thursday as optimism that a massive U.S. stimulus package under the new Joe Biden administration will bolster growth sapped demand for safe-haven currencies.

Riskier commodity currencies remained higher after U.S. stocks rose to new records overnight as Biden, who has laid out plans for a $1.9 trillion pandemic relief package, was sworn in as President.

The dollar tumbled to a three-year low against its Canadian counterpart on Wednesday after the Bank of Canada opted not to cut interest rates.

"Risk sentiment is quite positive right now and we expect it to remain so this year, with growth expected to rebound quite strongly," said Shinichiro Kadota, senior currency strategist at Barclays (LON:BARC) Capital in Tokyo.

The Canadian dollar and Norwegian crown are likely to outperform, while European currencies lag, he said.

The greenback should also strengthen this year as the United States recovers faster than most other countries, he added.

The U.S. currency slipped 0.1% to C$1.2623 in early Asian trading, declining for a third day and touching a three-year low at C$1.2607 overnight.

The dollar slid 0.2% to 8.48 Norwegian crowns, also a third day of declines.

The Aussie dollar rose 0.1% to 77.505 U.S. cents, adding to a 0.7% rally in the previous session. Australia boasted another solid rise in employment in December, data released Thursday showed.

Biden was sworn in as the 46th president of the United States on Wednesday, vowing to end the "uncivil war" in a deeply divided country reeling from a battered economy and a raging coronavirus pandemic that has killed more than 400,000 Americans.

North of the border, the Bank of Canada said Wednesday that the arrival of a COVID-19 vaccine and stronger foreign demand is brightening the economic outlook in the medium term, opting to hold its key overnight interest rate at 0.25%. Money markets had been watching the prospect of a so-called micro rate cut of less than 25 basis points.

The Japanese and European central banks decide on policy Thursday, with no change expected.

The dollar was mostly flat at 103.59 yen on Thursday, another safe haven currency, after sliding to a two-week low of 103.45 overnight.

The euro gained 0.2%, reversing a similar decline from the previous session, to trade at $1.21245.

European countries are struggling to contain the novel coronavirus amid worries that a new variant could lead to more stringent lockdowns and more economic pain.

The dollar index slipped 0.1% to 90.335, after closing almost unchanged on Wednesday.

Full coverage for Eikon readers of the U.S. presidential transition https://emea1.apps.cp.thomsonreuters.com/cms/?navid=20856

For multimedia coverage please open https://www.reuters.com/world/us in a separate browser

========================================================

Currency bid prices at 10:19AM (119 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar $1.2127 $1.2106 +0.18% -0.74% +1.2130 +1.2106

Dollar/Yen 103.5020 103.5500 -0.02% +0.23% +103.6520 +103.5300

Euro/Yen 125.52 125.33 +0.15% -1.10% +125.5900 +125.3300

Dollar/Swiss 0.8886 0.8898 -0.12% +0.45% +0.8899 +0.8887

Sterling/Dollar 1.3675 1.3660 +0.15% +0.14% +1.3679 +1.3656

Dollar/Canadian 1.2615 1.2635 -0.17% -0.94% +1.2634 +1.2612

Aussie/Dollar 0.7767 0.7747 +0.27% +0.98% +0.7772 +0.7746

NZ 0.7192 0.7170 +0.33% +0.18% +0.7198 +0.7173

Dollar/Dollar

All spots

Tokyo spots

Europe spots

Volatilities

© Reuters. FILE PHOTO: A picture illustration shows U.S. 100 dollar bank notes

Tokyo Forex market info from BOJ

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.