Dollar turns higher amid concerns over US stimulus talks

The US dollar rose against its peers on Tuesday, attracting safe-haven demand amid concerns about the US second fiscal stimulus package.

 

The stock market tumbled and turned lower today after President Trump decided to stop negotiation with the Democratic leaders in the US Congress about the second Covid-19 relief package.

 

President Trump decided to postpone the ongoing stimulus talks until after the election next November.

 

Otherwise, President Trump confirmed that his health has improved and left the Walter Reed Military Medical Center yesterday and returned to the White House after COVID-19 treatment.

 

Earlier data showed that the US trade balance registered a deficit of $67.1 billion in August, more than forecasts of -$66.2 billion.

 

The dollar index rose against a basket of currencies by 0.2% to 93.7 points as of 20:26 GMT, after hitting a high of 93.7 and a low of 93.3.


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Posted By laraparker : 07 October, 2020
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The US dollar rose on Monday, to consolidate above its 3-week lows, while heading for the first gain in 4 days, as demand for the US currency as the best alternative investment was renewed today, amid growing doubts about an agreement on a new fiscal aid package in the US ahead of the presidential elections.   The dollar index rose 0.2% to 93.24 points, after it opened at 93.06 points, and hit an intraday low of 93.01 points.   The index lost 0.5% on Friday, posting its third straight daily loss, and hit a 3-week low of 93.01 points, as investors focused on high-risk currencies.    The US dollar lost 0.8% during the past week, and posted the second straight weekly loss, due to hopes over an agreement on the US Covid-19 aid package.   The greenback's recovery is thanks to renewed demand, amid risk aversion sentiment and growing doubts about an agreement on a new fiscal aid package in the US.   US President Donald Trump proposed on Friday a $1.8 trillion coronavirus relief package in the ongoing talks with House Speaker Nancy Pelosi, but the latter is sticking to a $2.2 trillion aid proposal.   Trump's proposal was met with opposition from Senate Republicans, many of whom stressed concern about the country's growing debt, and its impact on support for Republicans in the next presidential election.   As the next election draws near, most investors are preparing for Biden winning the US election, which is expected to lift the US dollar and eases the political and trade tensions with China.

The British pound held steadily on Wednesday, despite the release of disappointing economic data and fears about the coronavirus crisis.   British Prime Minister Boris Johnson revealed a new plan to tighten the lockdown restrictions in the UK, to curb a second wave of infections.    The plan includes earlier closing times for pubs, nightclubs and restaurants, and could stay in place for the next six months.   Otherwise, data showed today that the UK's manufacturing PMI fell to 54.3 points in September, on par with forecasts, vs. August's reading of 55.2.   The services PMI fell to 55.1 points vs. 58.8 in August, which came lower than forecasts of 57 points.   As of 19:55 GMT, GBP/USD held at 1.2727, after hitting a day high of 1.2776 and a low of 1.2677.

The US dollar rose against a basket of currencies on Tuesday, to extend gains for the third straight day, and hit a 6-week high, attracting demand as the best alternative investment, amid renewed fears of a liquidity crunch due to the sharp sell-off in most global stock markets, and ahead of Fed Chair Jerome Powell's testimony before the US congress about the coronavirus economic impact.   The dollar index rose by 0.4% to the highest since August 12 at 93.89 points, after it opened at 93.55, and hit an intraday low of 93.47.   The US dollar gained more than 0.6% yesterday, and posted its second straight daily gain, and the largest gain since August 19, buoyed by increased demand.   The greenback shined as the best alternative investment due to growing concerns over that the global economy, after a surge in coronavirus infections in Europe and the US, and some countries considering re-imposing another public lockdown.   This led most of global stock markets to drop sharply, and renewed fears about a liquidity squeeze of the US dollar.   At 14:30 GMT, Federal Reserve Chair Jerome Powell is due testify before the House Financial Services Committee about the expected economic effects of the coronavirus pandemic   The testimony is expected to deliver insight about the US economic outlook, the future of US monetary policy, and the prospects for further monetary stimulus.   Bearing in mind that Powell unveiled a historic shift in US monetary policy at the Jackson Hole Economic Symposium that is aimed at allowing inflation to run above the Fed’s previous target to support the economic recovery from the coronavirus impact.


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