By Gina Lee
Investing.com – The dollar was down in Asia on Wednesday morning, with hopes of a U.S. economic recovery from COVID-19 continuing to diminish. Investors retreated from the greenback as the U.S. Congress failed to reach a consensus over the country’s latest stimulus measures and U.S. yields continue to plummet.
Although White House negotiators vowed on Tuesday to work “around the clock” to reach a consensus by the end of this week, U.S. Treasury Secretary Steven Mnuchin warned that “we’re not going anywhere close” to the $3.4 trillion price tag sought by Democrats.
“Failure to agree on a fiscal package has pushed back the U.S. dollar,” Imre Speizer, FX analyst at Westpac, told Reuters.
“So if they agree something in the next few days, see the dollar bouncing back,” he said. “But even if we get another leg to it, I think it is still dollar weakness for the rest of the year,” he said.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies slipped 0.09% to 93.148 by 10 AM ET (3 AM GMT).
The USD/JPY pair was down 0.14% to 105.56.
The AUD/USD pair gained 0.23% to 0.7177. Across the Tasman sea, the NZD/USD pair gained 0.17% to 0.6633, with the NZD supported by a surprise fall in unemployment.
The USD/CNY pair fell 0.09% to 6.9656. U.S. and Chinese officials are reported to be meeting to review the implementation of the phase 1 trade deal between the two countries, as well as discussing mutual grievances during an August 15 videoconference.
The GBP/USD pair gained 0.14% to 1.3079.
Meanwhile, the dollar’s losses have been the Euro’s gain after the European Union reached a consensus on a COVID-19 rescue package in July. The Euro posted its best month in almost a decade against the greenback in the same month.
But some investors suggested that a pile-in could provide more support to the greenback, with equity investors still skeptical over the EU package’s ability to kickstart the European economic recovery from COVID-19.
“Buy-side surveys suggest that investors are still heavily overweight U.S. equities, especially tech stocks, and are minded to rotate into the Eurozone and see the euro as cheap,” ING’s global head of markets Chris Turner told Reuters.
“If that rotation comes to pass ... then Euro/Dollar may be a $1.25 story after all.”