By Gina Lee
Investing.com – The dollar was up on Wednesday morning in Asia, holding onto gains from the previous session as further setbacks in developing a COVID-19 treatment and a lack of consensus over the latest stimulus measures in the U.S. sent investors scrambling for safety.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.01% to 93.550 by 10:12 PM ET (2:12 AM GMT).
Eli Lilly and Co. (NYSE:LLY) on Tuesday paused its government-sponsored clinical trial of its COVID-19 antibody treatment, similar to the one taken by President Donald Trump during his bout with the virus. The pause comes on the heels of Johnson & Johnson (NYSE:JNJ) suspending clinical trials for its COVID-19 vaccine on Monday due to a mystery illness in one of the participants, and dampened hopes that a treatment would be released soon.
Hopes that Congress would pass the latest stimulus bill ahead of the Nov. 3 presidential election continue to fade, dampening the economic outlook. Although no big moves are anticipated ahead of the election, some investors predicted that the dollar would continue to be supported by the dampened sentiment over the next few days.
Other investors listed even more reasons to be optimistic about the greenback’s prospects.
“Many factors are pointing to more upside for the dollar … U.S. stimulus may not come until after the election. The People’s Bank of China (PBOC) is halting the yuan’s rise. There’s no reason to buy the euro, and there are a lot of euro longs that need to be unwound,” Mizuho Securities chief currency strategist Masafumi Yamamoto told Reuters.
The USD/JPY pair edged down 0.11% to 105.35.
The USD/CNY pair inched down 0.02% to 6.7440. Investors continue to monitor the impact of PBOC’s attempts to stem the yuan’s recent appreciation, after the central bank announced on Monday that it would remove financial institutions’ reserve requirement ratio when conducting foreign exchange forwards trading. Investors also await a speech from China President Xi Jinping in Shenzhen later in the day, in which he is expected to map out a vision for the region’s growth.
The AUD/USD pair inched up 0.08% to 0.7166. Although the AUD was little changed earlier in the session, an ongoing coal imports spat between Canberra and Beijing sparked concern about the AUD adding to the 1.5% decline it saw during Tuesday’s session.
Across the Tasman Sea, the NZD/USD pair edged up 0.17% to 0.6659, with the NZD holding steady against the greenback as the country prepares to vote in a Oct.17 general election.
The GBP/USD pair inched up 0.01% to 1.2935. The pound extended declines as the U.K. continues to battle a second wave of COVID-19 cases and re-implements measures restricting economic activity. Further adding to the pound’s woes are worries about the little progress made towards a Brexit deal between the U.K. and the European Union, with less than two days to go ahead of Prime Minister Boris Johnson’s self-imposed Oct. 15 deadline. The possibility that the Bank of England could introduce negative interest rates also dampened investor sentiment.