Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Dollar firm as virus' spread and stimulus stalemate raise caution

ForexOct 26, 2020 12:20AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: U.S. dollars are counted out by a banker at a bank in Westminster

By Tom Westbrook

SINGAPORE (Reuters) - The dollar found support on Monday, as surging coronavirus cases in Europe and the United States and a lack of progress toward a U.S. stimulus package put traders in a cautious mood, although hopes for a Brexit trade deal held sterling steady.

Against a basket of currencies (=USD), the greenback trod water in the Asia session, after having fallen broadly last week. Against the risk-sensitive Australian dollar and against the euro it gained about 0.2%.

Sterling , however, held firm at $1.3024.

The United States has recorded its highest ever number of new COVID-19 cases for two consecutive days and so has France. Spain announced a new state of emergency and Italy has ordered restaurants and bars to shut by 6 p.m.

U.S. House Speaker Nancy Pelosi said on Sunday that she expected a White House response on Monday regarding the latest stimulus spending plan, but there have been few tangible signs that a long-stalled deal is actually nearer.

"The combination of receding hopes for a pre-election fiscal deal and the news on COVID and potentially stricter lockdowns is enough to take a bite out of the stock market," said Ray Attrill, head of FX strategy at National Australia Bank (OTC:NABZY).

He said half-percent dip in S&P 500 futures (ESc1) had spilled over into currency markets, where traders are also in a cautious mood ahead of the U.S. election on Nov. 3.

The Japanese yen slipped a fraction on the firmer dollar to 104.85 per dollar and other Asian currencies also traded a touch lower.

Hopes for a breakthrough in the trade-deal stalemate between Britain and Europe held the pound steady above $1.30.

Over the weekend, Britain's Northern Island minister said there was a good chance of a trade deal.

BLUE WAVES AND CENBANKS

The week ahead holds three major central bank meetings and the final sprint to the polls in the United States.

The Bank of Canada and Bank of Japan are expected to hold fire for now, while the market assumes the European Central Bank will sound cautious on inflation and growth, even if it skips a further easing on Thursday.

"The risk is that ECB President Christine Lagarde strikes a dovish tone during her post-meeting press conference," said Commonwealth Bank of Australia (OTC:CMWAY) currency analyst Joe Capurso.

"If President Lagarde emphasises the downside risks facing the Eurozone economy, the counter-cyclical dollar can rise."

Analysts also reckon that a Joe Biden victory next week, especially if the Democrats win control of the Senate, would likely herald a large U.S. stimulus package. But investors are treading carefully.

"I think that the dollar is now as polarised as it gets," said Diego Parrilla, chief investment officer of Quadriga Igneo, a fund designed to profit in market turmoil.

"On the one hand, we have a very clear will from the Fed and the U.S. government to print and borrow their way out of the problem," he said, weakening the outlook for the dollar.

"But it's almost like the more consensus you get and the bigger the position, you will see also big reversals, and my personal view is that the dollar remains a good thing to own during periods of stress."

Elsewhere, China's top leaders chart the country's economic course for 2021-2025 at a key meeting starting on Monday, and may adopt a lower or more flexible growth target.

The yuan , which has soared more than 7% since May as China has led the world's recovery from the COVID-19 pandemic, edged lower with the broader mood to 6.6852 per dollar.

Later on Monday, investors are watching for a German sentiment survey at 0900 GMT, following a robust Purchasing Managers' Index figure last week, and U.S. housing data, due at 1400 GMT.

Dollar firm as virus' spread and stimulus stalemate raise caution
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (7)
Paul Joe
Paul Joe Oct 26, 2020 8:21PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
what  else would you expect the liberal media to report but scare tactics ? and just in time for the elections . be afraid ! and pelosi wants to give billions to bailout the bankrupt democrats .  burn down the citys then ask americans to pay for it .
Paul Joe
Paul Joe Oct 26, 2020 8:19PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
pelosi wants to take billions of the money that is to go to tax payers and line the pockets of her corrupt buddies . the list is available of who she wants to bury in money and its disgusting  .
Dan Mej
Dan Mej Oct 26, 2020 1:32AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Corona cases are rising, people need money to survive and a check is not going to fix it. Both the Rep and Dem are playing with people. Likely the deal won't pass, parties will blame each other.
Alfri Arhat
Alfri Arhat Oct 26, 2020 12:55AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Pelosi is the one expecting good response monday morning.
William Smith
William Smith Oct 26, 2020 12:48AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Pelosi wont agree to anything before the election.
Alfri Arhat
Alfri Arhat Oct 26, 2020 12:44AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
There will be a good news regarding stimulus on monday morning
Jeff Gordon
Jeff Gordon Oct 25, 2020 9:33PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I bet dems don't do a large stimulus...by the time they are ready it will be February and Covid gone
Max Tor
Max Tor Oct 25, 2020 9:33PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Bet that! Predictable
Plopseven Schwartz
Plopseven Schwartz Oct 25, 2020 9:33PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
It’s been seven months and half of this country still can’t wear masks or even believe the virus is real. There’s zero chance we’re through the woods by February.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email