DOLLAR AT THREE-DAY LOWS

THE DOLLAR dropped to its lowest point in three days yesterday as global market risk appetite improved, while the pound zig-zagged after the Bank of England slowed the pace of its bond-buying, but left interest rates unchanged.

Fewer Americans filed new claims for unemployment benefits last week, data showed, as Covid-19 vaccination efforts and massive amounts of government stimulus led to a further reopening of the economy.

While the US economy has been gaining steam, Federal Reserve speakers on Wednesday downplayed the risks of higher inflation.

Those statements reinforced “the lower-for-longer mentality with regards to interest rates”, making the greenback less appealing, said Neil Jones, head of FX sales at Mizuho.

The safehaven dollar was down 0.31 percent in late afternoon trade at 91.977 against a basket of peer currencies.

“What we’ve seen early in New York is a little bit of back-and-forth gyrations, just because of the Bank of England meeting,” said Erik Bregar, director and head of FX strategy at the Exchange Bank of Canada.

The Bank of England said that it would slow the pace of its bond-buying as it sharply increased its forecast for Britain’s economic growth this year after its coronavirus slump, but it stressed it was not tightening monetary policy.

“They kept their QE (quantitative easing) target in place but they said they are going to reduce the weekly pace of purchases, but that is not a signal and so sterling has kind of gone up and down and done nothing at the end of the day,” Bregar said.

The pound was down 0.08 percent against the weaker dollar at $1.39.

The euro was up 0.47 percent versus the greenback at $1.2061, and up 0.65 percent against the pound, at 86.88 pence per euro.