Banknotes in euros with different values.
Jens Büttner | image alliance through Getty Images
The dollar was supported on Thursday by a cautious sense of risk stemming in part from concerns about the delta variant, while the euro was fixed in the European Central Bank’s policy decision later.
The dollar index stood at 92.712, after rising for the third day in a row on Wednesday, while US equities fell with a high valuation undermined by doubts about the strength of the economic recovery.
Risk sentiment gained a small boost after influential New York Fed Bank President John Williams said Wednesday afternoon that more needs to be made in the job market before its stimulus is reduced.
Still, his comments came as no surprise to anyone after the surprisingly soft U.S. payroll figures released on Friday effectively ruled out any possibility of the Fed declining this month.
On the other hand, the European Central Bank is expected to recover the stimulus on Thursday, taking a significant step towards developing the emergency financial aid it established during the pandemic.
Analysts polled by Reuters see that purchases under the Pandemic Emergency Purchase Program (PEPP) are likely to fall to € 60 billion a month from the current € 80 billion, before a further fall in early next year and the completion of the plan in March.
But at the same time, the ECB is expected to provide copious support over the next few years, even after the PEPP expires.
“If the ECB board discusses reducing bond purchases under PEPP, it will ensure that it continues with its conventional asset purchase program,” said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.
“Therefore, a change in policy is likely to occur with a warning. The euro may end up gaining little momentum in the end.”
The common currency fell to $ 1,1819, extending its withdrawal from Friday’s high of $ 1,1909. The pound sterling also fell to $ 1.3773 after reaching $ 1.38905.
The yen moved slightly to $ 110.24, while the Australian dollar fell to $ 0.7368.
The Canadian dollar changed hands at C $ 1.2693 per US dollar, falling to its lowest level since August 23.
The Bank of Canada left its key interest rate at a record low of 0.25% and maintained its current quantitative easing program on Wednesday.
The Chinese yuan stood at $ 6,457 ahead of China’s inflation data later.
A firmer dollar also put pressure on many emerging market currencies, with the Brazilian real and the Turkish lira among those hardest hit.
The real fell nearly 3% on Wednesday to $ 5.3214 per dollar from intensified political concerns, while President Jair Bolsonaro assassinated the country’s Supreme Court, encouraging people to disobey his sentences.
The lira lost 1.4% to $ 8,468 after Turkish Central Bank Governor Sahap Kavcioglu said on Wednesday that the current policy rate of 19% is tight enough to reduce inflation.
Elsewhere, Bitcoin remained volatile after Tuesday’s 11% dip.
It faces new challenges as the US financial watchdog warned major cryptocurrency exchange operator Coinbase that it would sue if it went ahead with the launch of its “Lend” product with interest in cryptocurrencies.
The last currency stood at $ 46,650, while the ether changed hands at $ 3,480.