After recovering from multi-month highs, the safe-harbor U.S. dollar (yen) and yen were on the back foot Thursday. This was despite a recovery of risk appetite due to strong earnings that lifted Wall Street stocks.
After Tesla Inc TSLA, cryptocurrencies rallied. CEO Elon Musk stated that the company would most likely resume accepting bitcoin payments.
After a 3 1/2 month high of 93.194, the dollar index =USD, which measures currency against six major peers, fell to 92.810 on Wednesday.
The yen traded at 130.045 for euro EURJPY=EBS after a nearly four-month high of 128.610 earlier in the week and at 81.00 to Australia’s dollar AUDJPY=EBS after a five-month peak of 79.55.
Tapas Strickland, a National Australia Bank analyst, wrote that strong earnings had swept away Delta concerns from the U.S.
He stated that the consensus was that the Delta strain does not pose an immediate threat to recovery. This delay will be for three months, as countries increase vaccinations in response.
Sterling GBP=D3 traded for $1.3708, after recovering from a 5 1/2 month trough of $1.35725 on Tuesday. This was despite rising Delta variants cases in Britain, and confusion over the lifting of restrictions in England.
The Aussie AUD=D3 traded at $0.7350 after falling to $0.72895 eight months ago. This was despite half of Australia being under lockdown.
The euro EUR=EBS was at $1.1789. This is an increase from Wednesday’s 3 1/2-month low of $1.1752, ahead of the closely watched European Central Bank policy announcement later in the day.
The first changes in strategy will be made by policymakers. They are likely to promise a longer period of stimulus to fulfill their commitment to increase inflation.
Analysts believe that ECB dovishness will weaken the euro in the medium-term.
In a research note, Carol Kong and Kim Mundy, strategists at Commonwealth Bank of Australia, wrote that ‘on balance, the ECB’s new inflation target suggests monetary policies will remain ultra-accommodative over an even longer time’. This will be a headwind to the euro.
“Indeed we expect that the ECB is one of the last central bank under our coverage to tighten its policy.”
Bitcoin BTC=BTSP posted Wednesday’s 7.9% spike – the largest since June – to trade at $32,200.
After a 12% rise, Rival ether ETH=BTSP traded below $2,000