NEW YORK • The Singapore dollar, euro, and Aussie and New Zealand dollars all posted more than two-year highs against the struggling greenback.
The Singapore dollar was trading at US$1.3230 yesterday morning, up 1.7 per cent for the year. This is also the highest for the Singdollar since April 2018.
Investors are betting that an improving economic outlook as Covid-19 vaccines are rolled out and unprecedented fiscal and monetary stimulus will boost global growth and asset prices this year.
US economic growth is expected to drag behind peers, however, with the US currency also suffering from rising fiscal and current account deficits as the government increases spending to tackle coronavirus-related business shutdowns.
Data on Wednesday showed that the advance US goods trade deficit rose to a record US$84.8 billion (S$112 billion) in November, from US$80.3 billion in October.
“The start of Covid-19 immunisation campaigns in several countries as well as additional US fiscal support have reduced downside risk to the global economy and bode well for general financial market sentiment. This remains a drag for USD,” Mr Elias Haddad, senior currency strategist at Commonwealth Bank of Australia, said in a report on Wednesday.
The US dollar fell 0.4 per cent against a basket of currencies to 89.65 on Wednesday after earlier dropping to 89.56, the lowest since April 2018. It was down more than 7 per cent last year.
Trading volumes are thin, with many investors out between the Christmas and New Year holidays.
The euro reached US$1.2310, before falling back to US$1.2292, up 0.3 per cent on the day.
The Aussie surged to US$0.7686, and was last up 0.9 per cent at US$0.7676. The kiwi reached US$0.7213, and was last at US$0.7200, up 0.7 per cent.
It was the highest level for all three currencies against the US dollar since April 2018.
The US dollar also slipped 0.2 per cent to 103.23 yen. It is holding just above a nine-month low of 102.86 yen reached on Dec 17.
Optimism of further US stimulus came even after Senate Majority Leader Mitch McConnell on Tuesday put off a vote on increasing Covid-19 relief cheques from US$600 to US$2,000.
US President-elect Joe Biden is expected to push for more measures to support the US economy after he is inaugurated this month.
Other data on Wednesday showed that contracts to buy US previously owned homes fell for a third straight month in November as an acute shortage of properties pushed up prices.
The sterling also jumped as lawmakers approved British Prime Minister Boris Johnson’s post-Brexit trade deal with the European Union.
The pound gained 0.9 per cent to US$1.3618. It is holding just below the US$1.3625 level reached last month, the highest since May 2018.
The greenback fell 0.4 per cent against the loonie to C$1.2765.
REUTERS
• Additional information from The Straits Times
