The dollar slumped to multiyear lows against many currencies on Wednesday as currency traders looked past a new delay in U.S. stimulus cheques and maintained bets that additional financial aid was still likely.
The greenback hit its weakest level in more than two years against the euro, the Australian and the New Zealand dollars. The greenback also fell to the lowest in more than five years against the Swiss franc and fell broadly against Asian currencies.
U.S. Senate Majority Leader Mitch McConnell on Tuesday blocked immediate consideration of a measure to increase COVID19 relief payments to 2,000, adding another twist to fractious negotiations over fiscal stimulus.
The dollar has fallen and riskier assets have risen since President Donald Trump signed a coronavirus aid and spending bill on Sunday, because more stimulus for the worlds largest economy reduces demand for the perceived safety of holding the greenback.
While the size of relief payments is still uncertain, many analysts say the dollar is likely to weaken further next year because Presidentelect Joe Biden is expected to push for even more economic support measures.
Our weak dollar call remains intact as we move into 2021, analysts at BBH wrote in a research memo.
What happens to the greenback … largely depends on how well the United States controls the virus in 2021 as well as the outlook for further fiscal stimulus.
The dollar fell to 1.2295 per euro on Wednesday, its weakest since April 2018….