Currencies Overview: US Dollar Near Lowest Level in 3 Years

The US dollar sat near its lowest level in three years against riskier currencies on Thursday, February 25th, as signs of a continued easing of monetary policy by the US Federal Reserve sparked trading in assets that are rising thanks to the improvement in the economic cycle.

The US currency plunged to new lows against the Australian and Canadian dollars and kept near lows recorded overnight against the British and New Zealand currencies.

Federal Reserve Chairman Jerome Powell confirmed on Wednesday that the central bank will not adjust its policy until the economy clearly recovers and that it will ignore any rise in inflation in the short term. His statements before the House Financial Services Committee echoed his testimony before the Senate the day before.

The easing of financial conditions, and promises of fiscal stimulus and speeding up the distribution of anti-COVID-19 vaccines, led the money to deliberations betting on improving economic activity and prices.

Commodity-linked currencies are poised to benefit from higher global trade, while investors also welcome Britain’s progress in recovering from the coronavirus pandemic.

And the Australian dollar recorded $0.79672, after touching earlier, a new high in three years at $0.7978. During trading, the Canadian dollar reached its highest level in three years at 1.2502 Canadian dollars to the US dollar.

The New Zealand dollar recorded $0.7434, slightly off the high it hit on Wednesday at $0.7455.

The pound rose 0.1% to $ 1.4161 after surging to $1.43 overnight for the first time since April 2018.

The euro traded near the upper bound of its recent range of $1.2178, near nearly a month’s high of $1.2180, which it touched earlier this week.

But the dollar rose against the rest of the other traditional safe-haven currencies, to maintain a two-day gain, trading at 105.875 yen, and consolidating near a three-month high against the Swiss franc at 90.945 Swiss francs, which it reached overnight.