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LONDON (Reuters) – The fell to its lowest since early January on Thursday and dropped to three-year lows against the Australian and Canadian dollars, after dovish signals from the U.S. Federal Reserve boosted the reflation trade in currency markets.

Easy financial conditions, the promise of fiscal stimulus and accelerating COVID-19 vaccine rollouts have driven money into what’s known as the reflation trade, referring to bets on an upswing in economic activity and prices.

Commodity-linked currencies are placed to benefit from a pickup in global trade, while investors have also cheered Britain’s progress in recovering from the coronavirus pandemic.

Fed Chair Jerome Powell reiterated on Wednesday that the central bank will not tighten its policy until the economy improves.

“The improving global growth outlook continues to be supported by loose monetary and fiscal policies,” wrote Lee Hardman, currency analyst at MUFG in a note to clients.

“For now we continue to see the current trading environment as remaining supportive for commodity-related currency strength, and recommended a long trade.”

At 0824 GMT, the dollar index was down 0.1% at 89.92 against a basket of currencies.

The Australian dollar, which is considered a liquid proxy for risk appetite, was up 0.3%, after reaching a three-year high of 0.7994 versus the U.S. dollar at 0826 GMT. The Canadian dollar was also at a three-year high against the U.S. dollar, at 1.2495 at 0757 GMT.

The New Zealand dollar was close to the previous session’s three-year highs, flat on the day at 0.7446 at 0830 GMT.

Oil prices have rallied around 30% since the start of the year, taking the commodity-linked Norwegian crown to its strongest since late 2018 against the dollar.

The euro touched its highest in over a month versus the dollar, briefly rising above $1.22. At 0831 GMT, it was at $1.2192, up 0.2% on the day.

Euro-Swiss franc has surged this week, as investors quit the safe-haven franc. The euro is in its eight consecutive session of gains versus the franc and has had its strongest week in percentage change terms since June 2020.

At 0834 GMT, the euro was up around 0.1% versus the franc, at 1.1043.

“This is a big vote of confidence in the global recovery, and we see on track to meet our year-end forecast at 1.15,” ING global head of markets Chris Turner wrote in a note to clients on Wednesday.

Reuters polls found that market participants expect the bull run in global stocks, fuelled by cheap liquidity and reflation hopes, to continue for at least another six months.

was steady around the $50,000 mark, having recovered some of its losses from the start of the week.