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The U.S. dollar extended its recent weakness on Wednesday, as risk sentiment improved after Gilead Sciences claimed that the results of its study showed improvement in patients taking its remdesivir to treat the coronavirus infection.
The National Institute of Allergy and Infectious Diseases has said that a study of Gilead's remdesivir drug met its primary endpoint, lifting expectations for a potential coronavirus treatment.
Though the dollar came off lower levels post mid morning and stayed not far down from the flat line for nearly a couple of hours, the Federal Reserve's policy statement weighed on the currency and pushed it down to lower levels.
The U.S. Federal Reserve today held its interest rate target between 0% and 0.25%.
The Fed said it would continue with its aggressive policy stance until it is comfortable that the economy is back on its feet.
The Federal Open Market Committee said in its post-meeting statement that the ongoing public health crisis "will weigh heavily on economic activity, employment, and inflation in the near term," and pose considerable risks to the economic outlook over the medium term.
"The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals," the statement reads.
Noting bleak conditions across multiple sectors of the economy, the Fed said, "The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world," the post-meeting statement said.
The dollar index was last seen at 99.52, down 0.34% from previous close. The index rose to 99.89 in early trades this morning.
Against the Euro, the dollar weakened to $1.0871, giving up nearly 0.5% from Tuesday's close, amid news about reopening of several nations in Europe as rate of new coronavirus cases and deaths slowed.
The Pound Sterling firmed up to $1.2462 from overnight $1.2426, rising nearly 0.3%.
The yen rose as well against the dollar, gaining more than 0.2% to 106.65 a dollar. It had settled at 106.87 a dollar on Tuesday.
The dollar was lower by about 0.8% against the loonie at C$1.3888 as crude oil prices rebounded strongly, gaining more than 30% at one stage.
Against the Aussie, the dollar was sharply down at $0.6552, and against Swiss franc, it was down slightly with a unit fetching CHF 0.9745.
U.S. economic activity saw a substantial contraction in the first quarter of 2020, according to a report released by the Commerce Department today.
The report said U.S. real gross domestic product decreased at an annual rate of 4.8% in the first quarter following the 2.1% jump in the fourth quarter of 2019.
The decrease in real GDP in the first quarter reflected negative contributions from consumer spending, non-residential fixed investment, exports, and private inventory investment.
A report released by National Association of Realtors on Wednesday showed a bigger than expected nosedive in U.S. pending home sales in the month of March.
NAR said its pending home sales index plunged by 20.8% to 88.2 in March after jumping by 2.3% to 111.4 in February. Economists had expected the index to tumbled by 10.0.
