US dollar recovered slightly from three weeks low that it had hit last week. The USD index reported the largest daily loss in six weeks on Friday as traders focus moved towards the risker assets such as equities and the euro amid renewed hopes over the second US stimulus package.
The USD index, which tracks the US dollar against the basket of currencies, trades slightly above the 93 levels after dipping around 92.90 level on Friday.
The euro jumped to $1.1825 while the British pound soared to $1.3038 and the Australian dollar stood around $0.7231.
Meanwhile, the Chinese Yuan hit the highest level in seventeen months against the US dollar, driven by a sharp increase in Chinese economic data. The Yuan has also been receiving backing from prospects that Joe Biden will win the elections, which will help in improving the trade relations between the two largest economies.
“Over the past few days, the markets seem to assume Biden will win the election. Trump seems desperate to get a deal but his comments are getting treated like a noise,” said Yusuke Okada, manager of forex at Mitsubishi Trust Bank.
“But I do think we could see a return of political uncertainties by the election. Markets seem to have priced in only the good news,” he added.
Euro soared to $1.18 level after trading in the range of $1.15 to $1.17 in the past few weeks against the US dollar. The rally in the common currency is driven by weaknesses in the greenback. The prospects for the launch of the digital euro increased strongly after the European Central Bank (ECB) announced that they are discussing all the factors for issuing a digital currency in the future.
ECB President Christine Lagarde stated that 73% of all physical retail payments are in cash while half of the consumers prefer to pay digitally.