Dollar dips as risk sentiment lifted by stimulus hopes
The safe-haven U.S. dollar dipped on Monday and riskier currencies outperformed on optimism that U.S. lawmakers will agree on new stimulus to blunt the economic impact of the coronavirus, while investors awaited updates on the severity of President Donald Trump’s COVID-19 symptoms.
Stocks rallied on Monday on the stimulus hopes and as Trump said he would be discharged from the hospital where he in his fourth day of treatment for the virus.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 93.423 following an earlier decline from levels above 93.6.
The euro gained 0.50% to $1.1774, the highest since Sept. 21.
The optimism was supported by White House Chief of Staff Mark Meadows, who said there is still potential for a deal among lawmakers in Washington on more economic relief, and that Trump is committed to getting the deal done.
Failure to reach a deal, however, would likely be positive for the dollar, which on Monday fell 0.32% against a basket of major currencies.
* “I think the market is convinced that sooner or later fiscal stimulus will materialize in the wake of data that continues to show a moderating U.S. economy,” said Joe Manimbo, senior market analyst, at Western Union Business Solutions in Washington.
* “We think that the prospects for stimulus before the election are still very low,” said Erik Nelson, a macro strategist at Wells Fargo in New York. “We’re of the view that we should fade this dollar weakness we’re seeing today, and in particular against some of these higher risk currencies like the Norwegian krone or the Australian dollar.”
Dollar's strength to be short-lived; volatility and weakness ahead - Reuters poll
The recent surge in the U.S. dollar will last less than three months, according to a majority of foreign exchange strategists polled by Reuters who said the greenback would have a roller coaster ride in the run-up to the U.S. presidential election.
Reference: CNBC, Reuters
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