Dollar drops as US presidential election looms
The US dollar fell against most its major peers on Tuesday, amid focus on the US presidential debate.
The market is focusing on the first US presidential debate between President Donald Trump and Democrat candidate Joe Biden.
Analysts expect a bearish market for the US dollar due to the US elections, in addition to more volatility in most market movements.
Trump approval ratings in latest polls have declined, while his challenger Joe Biden holding on to a lead over him, but Trump's campaign claimed the polls are "fake".
The market is also anticipating the monthly jobs data and the final Q2 GDP reading later this week.
The dollar index fell against a basket of currencies by 0.4% to 93.9 points as of 19:48 GMT, after it hit a high of 94.3 and a low of 93.8.
USD/JPY tilted lower in Asian trade amid a lack of data from Japan due to a national holiday and ahead of US data and Fed Chair Powell's testimony ahead of Congress. As of 06:56 GMT, USD/JPY fell 0.11% to 104.54, with an intraday low at 104.46. From the US, the Richmond manufacturing index is expected down to 12 from 18 in August, while existing home sales are expected up 2.4%, slowing down from 24.7% in July. Fed Chair Jerome Powell will do the first part of his Congressional testimony tomorrow with the second part due on Thursday on the economic impact of the coronavirus pandemic. The US Federal Reserve held the interest rate between zero and 0.25%, and signaled that it plans to keep near zero at least until the end of 2023. The central bank raised its estimates for the GDP in 2020, and lowered its forecasts for the unemployment rate to 7.6% due to the rapid recovery of the economy during this summer. Federal Reserve Chairman Jerome Powell confirmed the bank’s ability to support the US economy to return to its growth path, adding that Fed remains committed to using full range of tools.
The British pound held against most major currencies on Friday, following the release of positive economic data, and shrugged off a stronger US dollar. The UK GfK Consumer Confidence index hit -25 points in August, beating economists' forecasts of -27 points. The Public sector net borrowing reached 35.2 billion pounds, better than forecasts of 40.6 billion. Bank of England President Andrew Bailey said that the Brexit talks should result in a trade deal between the UK and the EU, as such an agreement is in the interest of both sides. Bailey added "it's reasonable to think the fast pattern of the recovery over the summer is not going to continue in the same way." As of 21:45 GMT, GBP/USD held at 1.2744, after hitting a day high of 1.2806 and a low of 1.2688.
At 12:30 GMT, the US economy released its reading of the GDP (final release), which decreased by 31.4% in the second quarter of 2020, the lowest reading ever in the US, but better than forecasts for a contraction by 31.7%, and better than the first reading of a contraction by 31.7%.