It’s Inauguration Day, so everyone will be focused on the Capitol Hill events. In general, Biden is expected to begin repealing Trump’s policy.
The dollar traded lower on Wednesday morning in Asia, with investors thinking about Janet Yellen’s (U.S. Secretary of the Treasury) immense spending commentaries. The euro held its strong position as a positive sentiment survey in Germany enhanced investor appetite.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies dropped 0.11% to 90.
The USD/JPY pair decreased 0.10% to 103.78. The safe-haven yen shortly crossed the 104 mark against the dollar over the improved sentiment but fell against other major currencies former in the session. The Bank of Japan is also going to announce its policy decision on Thursday.
The AUD/USD increased 0.27% to 0.7715 and the NZD/USD pair added 0.12% to 0.7126.
The USD/CNY pair slipped 0.03% to 6.4757. The yuan made modest gains in advance of the People’s Bank of China sharing January’s loan prime rate. No changes are expected in both the one-year and five-year loan prime rates.
The GBP/USD pair increased 0.14% to 1.3647. The pound was strengthened by Bank of England chief economist Andrew Haldane’s forecast that the U.K.’s economy is expected to recuperate from the second quarter of 2021.
Meanwhile, Janet Yellen (U.S. Secretary of the Treasury) stimulated Congress to “act big” on COVID- 19 relief. Her comments helped alleviate the risk-adverse tone, thus shifting investors’ interest away from the safe-haven U.S. dollar.
“The stimulatory bias of the incoming Biden administration’s economic policy is again at the center of market attention,” ANZ analysts noted.
“However, seesawing between expectations of reflation and current soft economic data will probably continue for a while longer,” the note continued thus limiting upside movement for currencies such as the NZD.
Meanwhile, the euro added 0.4% against the dollar overnight, and floated around $1.2145 earlier in the session. EUR was enhanced by both the Italian government surviving a confidence vote as well as a good enough ZEW economic sentiment survey in Germany.
The index read 61.8 for January, above the expected 60.
The European Central Bank is also due to hand down its policy decision on Thursday.