Dollar back on track after Fed makes moves

Chris Lee

The US dollar appeared to recover somewhat on Tuesday after a brief wobble in the forex markets in the midst of a significant announcement from the country’s Federal Reserve.

The greenback initially suffered at the outset of Tuesday’s trading.

However, as the day went on, the greenback appeared to be regaining ground that it had previously lost.

The dollar’s tumult came in the context of the news from the country’s central bank that it would begin to buy up corporate bonds.

The Fed said that it would start purchasing such debt from Tuesday.

It came as part of a wider context of a pre-announced stimulus package for firms hit by the coronavirus pandemic.

It also opened access to American businesses able to access support financing through a scheme termed the ‘Main Street Lending Program’.

The dollar’s wobble was also ameliorated somewhat by press reports in the US concerning the potential plans of President Donald Trump.

According to Bloomberg News, the president is debating whether or not to implement an infrastructure project worth almost $1tn.

Elsewhere around the world, the single European currency had managed to gain some ground following some losses earlier in the week – though it later remained merely steady as Tuesday continued.

It was spotted at $1.1316 in its pair against the greenback at one stage.

This flatness occurred despite an economic data release pertaining to a key node in the bloc’s economy.

Germany, which is Europe’s largest economy, revealed on Tuesday that investor sentiment in the country had gone up to a greater extent than had been predicted over the course of the month of June.

There appeared to be a suggestion that investors there thought that the pandemic would be concluded by the time the summer came around.

China was also in the spotlight for forex traders on Tuesday in the wake of the news that the country was grappling with what looked like a second wave of coronavirus.

The country’s capital city, Beijing, has introduced a new partial lockdown in an attempt to stem further spread of the disease.

Elsewhere in Asia, the pair containing the US dollar and the Japanese yen remained firm at around 107.28.

This came after the Japanese central bank, the Bank of Japan, said on Tuesday that it would keep current monetary policy in place.

It also appeared to take a relatively content stance in the face of the pandemic, suggesting to traders that the growth policies it had already implemented were sufficient from its perspective.

There will be a number of major items to watch out for as Thursday dawns.

The Australian unemployment rate for the month of May is due out at 1:30am GMT.

This is due to show a change from 6.2% to 7%.

An interest rate decision from the Swiss National Bank, meanwhile, is expected at 7:30am GMT.

This is due to see interest rates in the country held at their current position of -0.75%.

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