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U.S. Dollar Lower As Fed Announces New $2.3 Trillion Stimulus Package

U.S. Dollar Lower As Fed Announces New $2.3 Trillion Stimulus Package

The U.S. dollar lost ground against its major counterparts in the New York session on Thursday, after the Federal Reserve unveiled $2.3 trillion stimulus package to support the economy amid the coronavirus pandemic.

The Fed said it will provide up to $2.3 trillion in loans to assist households and employers of all sizes and bolster the ability of state and local governments to deliver critical services during the coronavirus pandemic.

“Our country’s highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus,” said Federal Reserve Chair Jerome Powell.

He added, “The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible.”

The Fed said the specific actions it is taking include bolstering the effectiveness of the Small Business Administration’s Paycheck Protection Program by supplying liquidity to participating financial institutions.

Data from the Labor Department showed that first-time claims for U.S. unemployment benefits decreased in the week ended April 4 but still came in well above economist estimates.

The report said 6.606 million people filed for unemployment last week, a decrease of 261,000 from the previous week’s upwardly revised level of 6.867 million.

The greenback reversed from its early highs of 1.0841 against the euro and 0.9734 against the franc, falling to 1-week lows of 1.0942 and 0.9666, respectively. Next key support for the greenback is likely seen around 1.12 against the euro and 0.94 against the franc.

The greenback depreciated to 108.52 against the yen, retreating from a high of 109.06 seen at 9:00 pm ET. The greenback is likely to face support around the 105.00 region, if it falls again.

The greenback was down at near a 2-week low of 1.2481 against the pound, after climbing to 1.2361 at 2:00 am ET. Further downtrend may take the greenback to a support around the 1.28 area.

Data from the Office for National Statistics showed that the UK economy shrank unexpectedly in February due to a large fall in construction.

Gross domestic product fell 0.1 percent month-on-month in February, confounding expectations for a monthly growth of 0.1 percent.

The U.S. currency weakened to near a 4-week low of 0.6307 against the aussie, near 2-week lows of 0.6068 against the kiwi and 1.3935 against the loonie, reversing from its previous highs of 0.6195, 0.5985 and 1.4077, respectively. The greenback is poised to challenge support around 0.70 against the aussie, 0.645 against the kiwi and 1.33 against the loonie.

The material has been provided by InstaForex Company – www.instaforex.com