The greenback gained on Wednesday, but held just below four-month highs reached a day earlier against the euro, as investors put more money into U.S. stock markets on greater optimism that the coronavirus will be contained.
China reported its lowest number of new coronavirus cases in nearly two weeks, lending weight to a forecast by its foremost medical adviser for the outbreak to end by April – but a global expert warned it was only beginning elsewhere.
“The market is reasonably confident that China will be able to get control of the virus, although it may take some time,” said Steve Englander, head of global G10 FX research at Standard Chartered in New York. “The fact that it just doesn’t seem to be as deadly outside of China is something that’s comforting markets.”
Wall Street opened at a record high. Investors grew more comfortable with risk, especially on the view that central banks are likely to provide more accommodation if the coronavirus harms the global economy.
On Tuesday, Federal Reserve Chair Jerome Powell told Congress the U.S. economy is in a good place, even as he cited the potential threat from the coronavirus in China and some long-term concerns.
The dollar gained 0.21% against the Japanese yen to 110 yen.
The euro dipped 0.05% against the greenback to $1.0909. It fell to $1.0889 on Tuesday, the lowest since Oct. 1.
The greenback has benefited against the euro as economic data shows a brighter economic outlook for the United States than for the euro zone.
“The U.S. economic data is still superior to other economies’ and the growth gap with the rest of the world remains substantial,” said Ugo Lancioni, portfolio manager of the Neuberger Berman Macro Opportunities FX Fund.
The New Zealand dollar jumped to a one-week high after the central bank removed the chance of a rate cut from its forward projections. – Reuters