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Dollar Up, With All Eyes on U.S. Stimulus Measures Progress

ForexOct 21, 2020 10:03PM ET
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By Gina Lee

Investing.com – The dollar was up on Thursday morning in Asia, reversing losses from the previous session as the focus remains squarely on the U.S. Congress’ progress towards passing the latest stimulus measures.

The U.S. dollar index that tracks the greenback against a basket of other currencies edged up 0.14% to 92.763 by 9:58 PM ET (1:58 AM GMT), after seeing its lowest level since Sep. 2 overnight. Both President Donald Trump and House of Representatives Speaker Nancy Pelosi had made remarks that raised hopes of the measures’ passage before the Nov. 3 presidential election, whetting investor appetite for riskier assets and a retreat from the greenback.

”For a while, the pattern has been that when stimulus talks stalled, equities fell and the dollars were being bought due to risk-averse sentiment. But with optimistic headlines like these, the market is inclined to shift to risk-on mood and sell the dollars,” Mizuho Bank chief market economist Daisuke Karakama told Reuters.

However, the optimism faded as continuous opposition from Senate Republicans reduces the chances of the measures being passed before the election. Pelosi herself said, before continuing discussions with Treasury Secretary Steven Mnuchin, that she remained optimistic about reaching a deal despite the Republican opposition but admitted that the measures might not pass before Americans head to the polls.

Investors now await the final presidential debate between Trump and Democrat candidate Joe Biden later in the day.

Federal Reserve Governor Lael Brainard separately warned that the biggest risk to her outlook for economic recovery was that the federal government’s fiscal support would be withdrawn too soon.

The USD/JPY pair edged up 0.13% to 104.69 and was little changed after seeing a four-week high during the previous session.

The AUD/USD pair was down 0.33% to 0.7094, with the AUD easing after E-mini futures for the S&P 500 EScv1 fell more than 0.6%. The NZD/USD pair inched down 0.08% to 0.6647.

The USD/CNY pair was up 0.22% to 6.6649.

The GBP/USD pair inched down 0.08% to 1.3133. The pound steadied against the dollar on Thursday, after rising to a six-week high during the previous session as U.K. chief Brexit negotiator David Frost announced the resumption of talks with the European Union. The talks will take place later in the day.

Dollar Up, With All Eyes on U.S. Stimulus Measures Progress
 

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