The dollar dipped to 90.419, a level not seen since April 2018
The dollar hovered close to two-year lows on Tuesday as progress toward a massive U.S. government spending bill and COVID-19 relief measures boosted spirits while investors hoped for ongoing cues of easy monetary policy from the Federal Reserve’s final meeting of the year.
The dollar index, which measures the greenback against a basket of currencies, was last at 90.458, after sinking as low as 90.419 on Monday, a level unseen since April 2018.
Hopes that U.S. lawmakers can agree on $1.4 trillion in spending and more clarity about COVID-19 vaccine distribution have whetted investors’ risk appetite, driving them away from safe-haven currencies.
The upbeat investor sentiment drove Wall Street’s main indexes higher on Tuesday. Apple Inc was the top boost to all three U.S. benchmarks, rising 3.5% to a more than three-month high after a report said it plans to increase iPhone production by 30% in the first half of 2021.
Despite alarming COVID-19 infection and death rates across Europe and the United States, progress on vaccine rollout continued. Moderna Inc’s COVID-19 vaccine appeared set for regulatory authorization this week.
Today we’ve been just kind of sitting back and waiting, on the dollar side, for news from Capitol Hill, said John Doyle, vice president of dealing and trading at Tempus Inc in Washington. That’s how the day started and I don’t see any huge moves that would have changed the outlook for that yet.
The Fed, which begins a two-day meeting on Tuesday, is expected to keep its key overnight interest rate pinned near zero and to signal it will stay there for years to come. Such moves would further boost investors’ confidence for risk-taking, analysts said.
Many analysts also expect new guidance on how long the Fed will keep up its massive bond-buying program.
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