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Dollar Loses Ground After Fed Announces Massive Stimulus

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Dollar Loses Ground After Fed Announces Massive Stimulus

The U.S. dollar lost ground against its peers on Thursday after the Federal Reserve set up a $2.3 trillion stimulus program to support the economy amid the coronavirus pandemic.

The Federal Reserve said this morning that 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 irus pandemic.

The U.S. Federal Reserve said today that 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 dollar index dropped to a low of 99.36 after the Fed came out with its stimulus announcement. It later recovered to 99.51, but was still trailing its previous close by about 0.6%.

Against the Euro, the dollar weakened to $1.0953 before regaining some ground and edging up to $1.0928. It had ended at $1.0858 on Wednesday.

The pound sterling was stronger by more than 0.6% despite easing to $1.2461 from the day’s high of $1.2483.

The Japanese Yen strengthened to 108.50 a dollar, from 109.06 yesterday.

The Aussie was up sharply against the dollar at $0.6339.

The dollar was down at 0.9662 against Swiss franc, and lower by 0.16% against the loonie at 1.3990.

The U.S. Labor Department 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 but well above economist estimates for 5.250 million new claims.

The spike in initial jobless claims in the latest week brings the total since the coronavirus-induced shutdown to 16.780 million.

Meanwhile, a report from the University of Michigan showed a record-breaking decline in U.S. consumer sentiment in the month of April.

The report said the consumer sentiment index plummeted to 71.0 in April after plunging to 89.1 in March. Economists had expected the index to tumble to 75.0.

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