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The US dollar weakens after Powell’s remarks to the Senate Banking Committee.

USD - United States Dollar

Fed Chair Jerome Powell said the Fed is ready to do what it takes to help the U.S. economy counter the fallout from the coronavirus, so the dollar weakened against most Group-of-10 currency peers for a second day and commodity-linked currencies rose with crude oil. The Greenback touched session lows in early NY trading and remained low as Powell spoke. Powell added, “...we are committed to using our full range of tools to support the economy in this challenging time even as we recognize that these actions are only a part of a broader public-sector response.”

Treasury Secretary Steven Mnuchin also said he plans to use all of the $500 billion that Congress provided to help the economy through direct lending from his agency and by backstopping lending programs at the Fed.

Powell still doesn't like negative interest rates and he is assuming there will not be a second wave of the coronavirus. He believes that the economy will recover through the second half of this year. Early today, Powell took a step back from the more forceful language he used in recent weeks urging Congress to consider more fiscal support for the economy. The US dollar loses -0.4 percent versus the Loonie, -0.53 versus the Aussie dollar, and -0.13 versus the Euro.

Key Movers

The reality of the latest risk-on mood and movement in G10 currencies over the last few hours stems from developments towards a coronavirus vaccination by a biotech company called Modena. A small number of healthy patients were given the first doses of Moderna's coronavirus vaccine and it appeared to have generated antibody responses to the virus, according to early phase one trial data released by the company on Monday.

The British Pound had already started to tick higher after the UK announced plans for 30 billion pounds in tariff cuts after Brexit. The new-post Brexit tariff regime is set to replace the European Union’s external tariff. The GBP/USD pair is trading a bit higher at 1.2244 at the time of this writing, despite the perception that the U.K. will join the negative-rates club by the end of December 2020.

Meanwhile, Italian debt is at risk of being unmanageable and the ECB Governing Council and EU leaders have to decide if they are willing to allow a much larger transfer of Italy’s liabilities to their balance sheets. The borrowing costs continue to rise in Italy. For now, the EUR/USD pair is trading higher due to the US dollar’s weakness.

Expected Ranges

USD/CAD: 1.3850 - 1.3900 ▼

EUR/USD: 1.0927 - 1.0980 ▲

GBP/USD: 1.2226 - 1.2318 ▲

AUD/USD: 0.6502 - 0.6572 ▲

NZD/USD: 0.6066 - 0.6156 ▲