By Gina Lee
Investing.com – The dollar was down on Tuesday morning in Asia, reversing earlier gains even as the U.S. Congress moved closer to a consensus over the latest COVID-19 stimulus measures and U.S. bond yields rebounded.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies slipped 0.06% to 93.537 by 10:01 PM ET (3:01 AM GMT).
Congressional leaders and officials from the Trump administration indicated on Monday that negotiations on the COVID-19 aid deal would resume, in the aftermath of U.S. President Donald Trump signing executive orders on Saturday which restored a part of enhanced unemployment payments and suspended payroll taxes.
Some investors were cheered by the news from Washington.
“The dollar’s decline appears to have come to a halt for now. Although talks on fiscal spending are locked in a stalemate, we are at least avoiding a complete cutoff of extra jobless benefits,” Minori Uchida, chief currency analyst at MUFG Bank, told Reuters.
But other investors’ enthusiasm was dampened by the smaller estimated price tag attached to the measures.
“Compared to market consensus of a stimulus deal worth $1 trillion-$1.5 trillion, economic boosts from the announced measures would be clearly smaller... looking at market reactions, investors appear to think that there will be some sort of deal eventually,” Takafumi Yamawaki, head of Japan rates and FX research at JPMorgan (NYSE:JPM), told Reuters.
The USD/JPY pair was up 0.05% to 106 as Japanese markets re-opened after a national holiday.
The AUD/USD pair gained 0.27% to 0.7168 and the NZD/USD pair rose 0.30% to 0.6609.
The USD/CNY pair fell 0.11% to 6.9536. Tensions between the U.S. and China continue to simmer, with China imposing sanctions on 11 U.S. citizens, including Senators Marco Rubio, Ted Cruz, Tom Cotton and Pat Toomey, on Monday. The Chinese move comes in response to the U.S. slapping sanctions on eleven Chinese officials and their allies in Hong Kong, including Hong Kong’s Chief Executive Carrie Lam.
U.S. Treasury Secretary Steven Mnuchin also issued a warning that companies from China and other countries that do not comply with accounting standards face being delisted from U.S. stock exchanges as of the end of 2021.
The GBP/USD pair gained 0.15% to 1.3089.