Dollar sold on stimulus hopes and recovery prospects
Reuters
Published Sep 30, 2020 08:49PM ET
By Tom Westbrook
SINGAPORE (Reuters) - The dollar was on the defensive at a one-week low on Thursday, as robust U.S. data and fresh hopes for U.S. fiscal stimulus had investors confident enough about economic recovery prospects to seek out riskier currencies.
U.S. Treasury Secretary Steven Mnuchin told reporters that talks with House Speaker Nancy Pelosi "made a lot of progress" on long-awaited COVID-19 relief legislation.
Along with strong U.S. labour and manufacturing data, that helped stocks to rally and the mood pulled the dollar to a one-week low of 93.664 against a basket of currencies (=USD).
Early in the Asia session the New Zealand dollar NZD=D3 extended gains to a one-week peak of $0.6623. The Aussie AUD=D3 rose 0.1% to $0.7170, a fraction below a one-week top of $0.7175 made overnight.
Mnuchin said later on Fox Business News that he would not accept the Democrats' proposed $2.2 trillion aid package, rather something closer to $1.5 trillion, adding that an agreement had been reached on direct payments to Americans.
"The two sides have come a long way," said Westpac FX analyst Sean Callow.
"The rhetoric is reasonably conciliatory, I think we're getting closer," he said, adding an agreement would help the mood in equity markets and likely spill over into currency trade, boosting riskier currencies at the dollar's expense.
At the same time, jobs figures that showed U.S. private employers stepped up hiring harder than forecast last month and that midwest manufacturing grew faster than expected also fed in to the positive sentiment.
Chinese data on Wednesday had also shown the recovery on track in the world's second-biggest economy.
The yuan
Nevertheless, firmness in the safe-haven Japanese yen indicated that plenty of underlying caution still remains. The yen
It ended its quarter since mid-2019 on Wednesday with a 2.4% gain over the three months to Sept. 30 as some of the exuberance in risk assets wore off, particularly in September.
Gains in the euro overnight were also muted after European Central Bank President Christine Lagarde hinted that a strategy overhaul, and a more accommodative approach to inflation, could be possible.
The euro (EUR=) edged up 0.2% on Wednesday and held at $1.1726 on Thursday. The pound
Final purchasing managers index figures are due in Europe and Britain later on Thursday, followed by the ISM manufacturing survey in the United States and jobless claims data - all providing an update on the progress of the global coronavirus recovery.
Get The News You Want
Speeches from Bank of England Chief Economist Andy Haldane, at 1020 GMT, and ECB Chief Economist Philip Lane, at 1545 GMT, will also be closely watched for hints as to the next monetary moves.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.