Concerns about US stimulus package cause greenback to lose support
January 21, 2022

Concerns about US stimulus package cause greenback to lose support

TOKYO (JAPAN) – The US dollar on Wednesday suffered losses against most currencies. It was caused by concerns that the Democrats and the Republicans are struggling to reach an agreement on the next round of US economic stimulus measures.

After European Union leaders agreed to come out with a stimulus package, the euro traded at its strongest level in more than a year.

The urge for riskier assets greatly improved this week amid progress in developing a vaccine for coronavirus. This has reduced the greenback’s safe-harbour appeal.

Most investors hope there will be a massive amount of fiscal spending to support growth in major economies. But if it falls short of expectations, they could be disappointed.

“You could say the dollar is weaker due to a risk-on move,” said Shane Oliver, head of investment strategy and chief economist at Sydney-based AMP Capital Investors.

“Ironically, the dollar’s weakness has been exacerbated by concerns that the United States is not doing as much as the Europeans have on stimulus.”

The dollar traded at $1.2719 against the pound but it fell to 0.9315 against the Swiss franc, the lowest since March.

(Photos syndicated via Reuters)
This story has been edited by BH staff and is published from a syndicated field

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