NEW YORK, Dec. 17 (Xinhua) -- The U.S. dollar dropped to its lowest level in more than two years against its major rivals on Thursday, as risk appetite was boosted by multiple factors, depressing demand of the save-haven currency.
The dollar index, which measures the greenback against six major peers, fell 0.70 percent at 89.8200 in late trading, breaking 90 for the first time since April 2018.
Risky assets including equities rallied with Wall Street's major averages closing at new record highs on Thursday.
The market reactions came amid growing hopes for a fresh fiscal package in the United States and positive news on coronavirus vaccine rollouts.
U.S. Democratic and Republican lawmakers have made headway in the negotiations on the long-awaited next round of COVID-19 relief, with leaders on both sides announcing progress on Wednesday.
The news came as COVID-19 infections continued to surge across the United States. Economists, as well as Federal Reserve officials, have repeatedly argued that more fiscal relief is needed to sustain the economic recovery, warning of dire consequences if further fiscal support is not provided in time.
"While we expect stocks to benefit further from positive news on vaccine rollouts and U.S. fiscal support, the same cannot be said for the U.S. dollar," Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note.
The prospect for further U.S. fiscal stimulus is likely to keep U.S. indebtedness in focus, adding to pressure on the greenback, he said.
Analysts at UBS saw "further weakness ahead" for the greenback, as "safe haven demand for the dollar is being eroded by a broadening global recovery."
The Federal Reserve on Wednesday reiterated its pledge to do everything it can to support the economy, saying it would continue bond buying until substantial progress is made.
The U.S. central bank also suggested interest rates were likely to stay near zero through 2023.
"What is positive for the stock markets does not necessarily have to be good for the dollar," said Antje Praefcke, analyst at Commerzbank Research.
"The FOMC (Federal Open Market Committee) guidance made clear once again: if the economy recovers further inflation expectations will rise again, since due to its new strategy the Fed will accept inflation overshooting its target. This pushes the real interest rate further into negative territory, which in turn is going to put pressure on the dollar," Praefcke added.
Thursday's U.S. dollar weakness was broad.
In late New York trading, the euro was up to 1.2264 U.S. dollars from 1.2164 dollars in the previous session, and the British pound was up to 1.3574 dollars from 1.3478 U.S. dollars in the previous session. The Australian dollar was up to 0.7622 U.S. dollar from 0.7563 dollar.
The U.S. dollar bought 103.10 Japanese yen, lower than 103.61 Japanese yen of the previous session. The U.S. dollar was down to 0.8849 Swiss franc from 0.8871 Swiss franc, and it decreased to 1.2727 Canadian dollars from 1.2754 Canadian dollars. Enditem
