TOKYO- The dollar slipped to a three-year low against the British pound and fell against commodities currencies on Wednesday as investors increased bets that a global economic recovery will boost riskier assets.
The New Zealand dollar briefly fell but then quickly stabilized after the country’s central bank kept monetary policy on hold and said inflation and employment will remain below its targets in the medium term.
US Federal Reserve Chair Jerome Powell reiterated on Tuesday that interest rates will remain low and the Fed will keep buying bonds to support the US economy, which many traders say is a long-term negative factor for the dollar.
At the same time, more money is flowing toward currencies that are expected to benefit from a pick-up in global trade and to countries that are bouncing back quickly from the coronavirus pandemic, which is also weighing on the dollar.
“Signs of economic recovery are lifting commodities prices, which in turn supports currencies of commodities exporters,” said Junichi Ishikawa, foreign exchange strategist at IG Securities.
“Risk appetite has improved a lot, and this leaves the dollar at a big disadvantage.”
The British pound rose to $1.4170, the highest since April 2018.
The outlook for sterling has brightened as investors cheer Britain’s rapid coronavirus vaccination program and its plans to ease lockdown restrictions on economic activity. – Reuters