The U.S. dollar tumbled to a two-year low on Wednesday, after snapping having snapped a losing streak a day earlier, weighed down by rising coronavirus cases across U.S., and the Federal Reserve’s comments that interest rates will remain at near-zero levels amid the economic hardship imposed by the coronavirus pandemic.
The Fed said it decided to maintain the target range for the federal funds rate at zero to 0.25%, where it has remained since an emergency rate cut on March 15.
The accompanying statement noted economic activity and employment have picked up somewhat in recent months following sharp declines but remain well below their levels at the beginning of the year.
The central bank partly attributed the recent improvement in overall financial conditions to policy measures to support the economy and the flow of credit to U.S. households and businesses.
The Fed also reiterated that it remains committed to using its full range of tools to support the U.S. economy in this challenging time.
In addition to keeping interest rates at current levels until it is confident the economy has weathered recent events, the Fed said it will also continue to increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace.
The dollar index fell to 93.18 and was last seen at 93.29, down 0.44% from previous close.
Against the Euro, the dollar weakened to $1.1806 before recovering slightly to $1.1793. It had settled at $1.1715 a day earlier.
The Pound Sterling strengthened with a unit of sterling fetching $1.2994, compared with $1.2930 on Tuesday.
The Japanese currency Yen was stronger at 104.94 a dollar, firming up from 105.09.
Against the Aussie, the dollar weakened to 0.7188, giving up more than 0.4%. The Swiss franc was stronger by nearly 0.6% at CHF0.9127 a dollar, gaining from CHF0.9179, while the Loonie was up by about 0.3% at C$1.3338.
A report released by the National Association of Realtors said pending home sales in the U.S. showed a significant increase in the month of June. NAR said its pending home sales index surged up by 16.6% to 116.1 in June after skyrocketing by 44.3% to 99.6 in May. Economists had expected pending home sales to jump by 15%.
In coronavirus news, several U.S. states in the South and West reported their biggest one-day increase in coronavirus deaths Tuesday, fueling a bitter debate over the reopening of schools in the coming weeks.
The material has been provided by InstaForex Company – www.instaforex.com