FOREX-Dollar retreats on U.S. stimulus hopes

  • Reuters
  • Forex News
FOREX-Dollar retreats on U.S. stimulus hopes
Credit: © Reuters.

* Mnuchin, Pelosi try to hammer out stimulus plan

* Pelosi says Democrats, Republicans remain apart on size of aid

* U.S. data mixed overall, little dollar impact

* Chinese yuan rises to year-and-a-half high vs dollar

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E (New throughout, updates prices, market activity and comments)

By Gertrude Chavez-Dreyfuss

NEW YORK, Oct 1 (Reuters) - The dollar kicked off the fourth quarter on a sour note, falling to a more than one-week low on Thursday against a major currency basket, as hopes for U.S. fiscal stimulus cheered investors and spurred them to seek higher-yielding but riskier currencies.

The Chinese yuan gained the most against the dollar, reaching a year-and-a-half high in the offshore market, as a holiday in China dried up liquidity, exaggerating the moves.

In addition, Chinese data on Wednesday showed its economic recovery was on track. currencies such as the Australian, New Zealand, and Canadian dollars as well as the Norwegian crown also rose versus the greenback.

U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin remained far from agreement on COVID-19 relief in several key areas on Thursday, after a phone discussion failed to bridge what Pelosi described as differences over dollars and values. Democrats have proposed a $2.2 trillion package to respond to a pandemic, while Republicans have suggested a $1.6 trillion response.

"Both sides have a lot of signaling, like peacocks walking around. If we don't get anything before the election, we'll get something after," said Marc Chandler, chief market strategist, at Bannockburn Forex in New York.

"But as we get into the new period, people still want to buy equities and to take on some risk," he added.

Wall Street shares were higher on the day, while U.S. Treasury prices were lower.

In afternoon trading, the euro rose 0.2% against the dollar to $1.1743 EUR=EBS .

The Australian dollar rose 0.3% against the greenback to US$0.7189 AUD=D3 . The New Zealand dollar gained 0.6% to US$0.6648 NZD=D3 . Against the Canadian dollar, the U.S. dollar fell 0.4% C$1.3270 CAD=D3 .

The dollar index was down 0.1% at 93.722 =USD , after earlier falling to 93.522, its weakest level since Sept. 22.

That said, analysts remained skeptical about the dollar's weakness and looked to fade the moves in risk assets overall.

"There is heightened possibility, especially in Europe, for more localized lockdowns," said Simon Harvey, FX market analyst, at Monex Europe in London. "And that kind of risk-off filtering into the dollar is very much alive and kicking."

Thursday's U.S. data had minimal impact on currencies. If anything, they affirmed the tentative nature of the U.S. economic recovery.

Data showed U.S. initial jobless claims fell last week but remained at recession levels, while personal income dropped in August. construction spending increased more than expected in August as historically low interest rates boosted homebuilding, but manufacturing activity unexpectedly slowed in September. the dollar fell to 6.7306 yuan CNH=EBS in the offshore market, its lowest since early May 2019. It was last down 0.5% at 6.7506 yuan.

========================================================

Currency bid prices at 3:00PM (1900 GMT) Description

RIC

Last

U.S. Close Pct Change

YTD Pct

High Bid

Low Bid

Previous

Change

Session

Euro/Dollar

EUR=

$1.1745

$1.1718

+0.23%

+4.77%

+1.1769

+1.1718 Dollar/Yen

JPY=

105.5500

105.4500

+0.09%

-3.04%

+105.7400 +105.4100 Euro/Yen

EURJPY=

123.97

123.56

+0.33%

+1.66%

+124.2000 +123.6000 Dollar/Swiss

CHF=

0.9185

0.9207

-0.24%

-5.09%

+0.9215

+0.9165 Sterling/Dollar GBP=

1.2890

1.2916

-0.20%

-2.77%

+1.2978

+1.2821 Dollar/Canadian CAD=

1.3272

1.3319

-0.35%

+2.20%

+1.3327

+1.3268 Australian/Doll AUD=

0.7191

0.7161

+0.42%

+2.42%

+0.7209

+0.7155 ar

Euro/Swiss

EURCHF=

1.0788

1.0791

-0.03%

-0.57%

+1.0805

+1.0767 Euro/Sterling

EURGBP=

0.9109

0.9071

+0.42%

+7.75%

+0.9156

+0.9062 NZ

NZD=

0.6649

0.6610

+0.59%

-1.29%

+0.6656

+0.6606 Dollar/Dollar

Dollar/Norway

NOK=

9.3001

9.3300

-0.32%

+5.94%

+9.3500

+9.2525 Euro/Norway

EURNOK=

10.9240

10.9369

-0.12%

+11.04%

+10.9640

+10.8626 Dollar/Sweden

SEK=

8.9186

8.9544

-0.16%

-4.58%

+8.9645

+8.8994 Euro/Sweden

EURSEK=

10.4772

10.4945

-0.16%

+0.08%

+10.5137

+10.4716

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or

100

Related Articles