During Wednesday’s trading, the US dollar fell against the yen, but remained stable against the euro.
The yen is rising in value amid the approval process for Japan’s new prime minister. Mr Suga won the vote for the presidency of the conservative Liberal Democratic Party (LDP) by a large margin. The growth was also stimulated by traders’ bets that the confirmation of the ultra-soft policy by the US Federal Reserve System will put pressure on the US dollar.
The ICE Index, which measures the US dollar against six major currencies, is stable, in contrast to the WSJ Dollar Index. It lost 0.04%.
The EUR/USD rate is $1.1846. The GBP/USD rate rose to $1.2914 amid hopes that the UK’s plan to violate the Brexit agreement will not be implemented.
JPY/USD fell by 0.08% to settle at 105.36 yen. This is the highest point over two weeks. JPY/EUR also lost 0.12% to trade at 124.76 yen.
The Australian dollar and the New Zealand dollar showed growth as well. Now, the currencies are trading at $0.7317 and $0.6727 respectively.
At the moment, traders are waiting for the Fed’s meeting results. Experts are confident that the regulator will continue to reduce interest rates after the recent change in its long-term strategy. They expect that the new strategy, which provides a softer approach to the monetary policy, will be reflected in particular measures to support the American economy. What is more, the prospects for the approval of the next batch of fiscal stimulus by the US authorities are increasingly dubious.
The Fed continues to support the US economy amid coronavirus pandemic risks and the upcoming US presidential elections.
Moreover, the yuan hit a new 16-month high today in offshore trading to settle at $6.7652. The currency made a decisive jump amid strong data on retail sales and industrial production. As a result, the South Korean won and the Malaysian ringgit hit their highest levels for the first time in over 7 months.
Moreover, the Chinese yuan’s strength means that politicians do not object to a strong currency amid a broader political shift towards domestic growth in China.
The yuan surprises traders and has advanced by more than 5% over the last four months.
Curiously enough, as experts say, but people begin to realize that China has taken control of the crisis and is getting much better than any other country.