The safe haven dollar and Japanese yen rallied on Tuesday after U.S. President Donald Trump called off negotiations with Democratic lawmakers on a coronavirus relief stimulus package until after the Nov. 3 election.
Trump accused House of Representatives Speaker Nancy Pelosi of not negotiating in good faith.
The dollar had dipped over the previous few days on optimism that a stimulus deal was near.
The dollar index against a basket of major currencies jumped to a session high of 93.80, up 0.34% on the day.
The greenback dipped 0.19% against the Japanese yen to 105.52 yen.
The mighty dollar has weakened under Trump. A Biden win could change that
In theory, a Biden win could reduce the value of the greenback even more. A President Biden would likely spend more on stimulus, both for Covid-19 relief and potentially on infrastructure — especially if there is a blue wave that leads to Democrats taking control of the Senate.
More spending could weaken the dollar, especially if Biden also looks to roll back some of Trump's tax cuts. That could reduce corporate and consumer spending.
But conventional wisdom may no longer apply. The US Dollar Index has fallen more than 7% since Trump's inauguration.
EUR/USD could drop to 1.13 by year-end - Eurizon SLJ
Analysts at Eurizon SLJ, a London-based asset management company, foresee EUR/USD falling to 1.13 by the year-end, as the European Central Bank (ECB) is likely to boost easing in response to the low and declining inflation trend, according to market observer Holger Zschaeptiz.
Eurozone core consumer price index declined to a record low of 0.2% in September. The second quarter's sharp fall in Eurozone labor compensation suggests the core inflation reading could fall further.
Reference: Reuters, Edition, FXStreet
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