Dollar falls broadly on risk-on trade after Fed announced corporate bond purchase
The greenback fell broadly in New York afternoon trading due to risk-on trade after the Federal Reserve said it will start purchasing corporate bonds, U.S. stocks erased intra-day losses and rebounded after the new.
Reuters reported the Federal Reserve said it will start purchasing corporate bonds on Tuesday through the secondary market corporate credit facility (SMCCF), one of several emergency facilities recently launched by the U.S. central bank to improve market functioning in the wake of the coronavirus pandemic. The Fed will use an indexing approach when making purchases, aiming to create a portfolio that is based on a broad, diversified market index of U.S. corporate bonds.
The purchases will complement the other asset purchases made by the SMCCF, which began buying shares of broad-based exchange-traded funds in mid-May. Stock markets rose on the announcement on Monday afternoon after the news boosted investor confidence.
Versus the Japanese yen, although dollar briefly gained to 107.57 in New Zealand, price met renewed selling and fell to 107.15 at Asian open, then 107.01 on active safe-haven jpy buying due to selloff in the Nikkei 225 as well as weakness in U.S. stock futures. However, the pair then rebounded to 107.44 in European morning, and then ratcheted higher to 107.48 in New York morning before moving sideways.
Although the single currency rebounded from 1.1227 in New Zealand to 1.1268 in Asia, price retreated to 1.1227 at European open. However, renewed buying emerged and lifted the pair to session highs at 1.1333 in New York afternoon on usd's weakness following Fed's bond purchase announcement.
The British pound went through a volatile session. Cable initially fell to 1.2487 in New Zealand, then to a 13-day low of 1.2455 at European open on safe-haven usd buying due to fear over second wave of coronavirus pandemic. However, price erased its losses and rallied to 1.2606 in New York on short-covering in sterling after positive EU/UK high-level Brexit video conference together with usd's weakness.
Reuters reported Britain and the European Union agreed on Monday that new momentum was required in talks on their future ties, supporting plans to intensify the negotiations that have all but stalled and to work hard "to deliver a relationship". In a joint statement, the two sides said: "The parties agreed nevertheless that new momentum was required. They supported the plans agreed by chief negotiators to intensify the talks in July and to create the most conducive conditions for concluding and ratifying a deal before the end of 2020.
Data to be released on Tuesday :
New Zealand Westpac consumer survey, GDT price index, Australia home price index, Japan Bank of Japan interest rate decision, Germany CPI, HICP, wholesale price index, ZEW economic sentiment, ZEW current conditions, UK claimant count, ILO unemployment rate, employment change, average weekly earnings, EU labour costs, ZEW survey expectations, and U.S. retail sales ex-autos, retail sales, redbook, industrial production, capital utilization, manufacturing output, business inventories, NAHB housing index.
The greenback fell broadly in New York afternoon trading due to risk-on trade after the Federal Reserve said it will start purchasing corporate bonds, U.S. stocks erased intra-day losses and rebounded after the new.
Reuters reported the Federal Reserve said it will start purchasing corporate bonds on Tuesday through the secondary market corporate credit facility (SMCCF), one of several emergency facilities recently launched by the U.S. central bank to improve market functioning in the wake of the coronavirus pandemic. The Fed will use an indexing approach when making purchases, aiming to create a portfolio that is based on a broad, diversified market index of U.S. corporate bonds.
The purchases will complement the other asset purchases made by the SMCCF, which began buying shares of broad-based exchange-traded funds in mid-May. Stock markets rose on the announcement on Monday afternoon after the news boosted investor confidence.
Versus the Japanese yen, although dollar briefly gained to 107.57 in New Zealand, price met renewed selling and fell to 107.15 at Asian open, then 107.01 on active safe-haven jpy buying due to selloff in the Nikkei 225 as well as weakness in U.S. stock futures. However, the pair then rebounded to 107.44 in European morning, and then ratcheted higher to 107.48 in New York morning before moving sideways.
Although the single currency rebounded from 1.1227 in New Zealand to 1.1268 in Asia, price retreated to 1.1227 at European open. However, renewed buying emerged and lifted the pair to session highs at 1.1333 in New York afternoon on usd's weakness following Fed's bond purchase announcement.
The British pound went through a volatile session. Cable initially fell to 1.2487 in New Zealand, then to a 13-day low of 1.2455 at European open on safe-haven usd buying due to fear over second wave of coronavirus pandemic. However, price erased its losses and rallied to 1.2606 in New York on short-covering in sterling after positive EU/UK high-level Brexit video conference together with usd's weakness.
Reuters reported Britain and the European Union agreed on Monday that new momentum was required in talks on their future ties, supporting plans to intensify the negotiations that have all but stalled and to work hard "to deliver a relationship". In a joint statement, the two sides said: "The parties agreed nevertheless that new momentum was required. They supported the plans agreed by chief negotiators to intensify the talks in July and to create the most conducive conditions for concluding and ratifying a deal before the end of 2020.
Data to be released on Tuesday :
New Zealand Westpac consumer survey, GDT price index, Australia home price index, Japan Bank of Japan interest rate decision, Germany CPI, HICP, wholesale price index, ZEW economic sentiment, ZEW current conditions, UK claimant count, ILO unemployment rate, employment change, average weekly earnings, EU labour costs, ZEW survey expectations, and U.S. retail sales ex-autos, retail sales, redbook, industrial production, capital utilization, manufacturing output, business inventories, NAHB housing index.
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