Dollar falls, risk currencies gain on Fed debt buying stimulus

Dollar falls, risk currencies gain on Fed debt buying stimulus

The dollar fell on Tuesday following the U.S. Federal Reserve’s announcement to begin broad buying of corporate debt, lifting appetite for risk currencies.

The Fed said that it will start buying diverse investment grade U.S. corporate bonds on Tuesday. This was to ensure companies’ access to cash and guarantee credit market liquidity amid the pandemic.

The announcement dwarfed market worries about a second coronavirus wave, which dominated the previous day’s trading session.

The dollar index steadied at 96.546.

The Aussie was up 0.6% to $0.6968 and the kiwi rose 0.4% to $0.6497. Stocks also gained, while safe-haven Treasuries fell.

The Reserve Bank of Australia said in its June meeting that the national economic downturn is not as bad as previously thought.

The pound gained 0.3% to $1.2637, while the euro rose to $1.1332. 

The safe-haven yen firmed at 107.41 on the dollar, while the Chinese yuan also rose against the greenback.

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