SINGAPORE- The US dollar nursed losses on Wednesday and the euro hung on to gains as investors’ mood brightened in the wake of a better-than-expected sentiment survey in Germany and big spending talk from US Treasury Secretary nominee Janet Yellen.
Yellen’s comments, urging lawmakers to “act big” on coronavirus relief and not worry too much about debt, helped assuage this week’s risk averse tone and knocked the dollar index from a one-month high.
The euro bounced off support around $1.2050, lifting about 0.4 percent on the dollar overnight to hit $1.2145, following a ZEW investor sentiment survey that beat forecasts and the Italian government surviving a confidence vote.
It held near that level in Asia, and the risk-sensitive Australian and New Zealand dollars edged up in morning trade to also hold modest overnight rises. The Aussie was last up 0.2 percent at $0.7707 and the kiwi up 0.1 percent to $0.7122.
“The stimulatory bias of the incoming Biden administration’s economic policy is again at the centre of market attention,” ANZ analysts said in a note to clients.
“However, seesawing between expectations of reflation and current soft economic data will probably continue for a while longer,” they added, limiting upside for currencies such as the kiwi.