Dollar gives ground as hopes of US stimulus leads traders to riskier currencies
October 01, 2020 @ 12:41 +03:00
The dollar fell to a nine-day low on Thursday, as robust U.S. data and hopes for U.S. fiscal stimulus left investors confident enough to seek out riskier currencies. The Chinese yuan gained the most against the dollar, reach 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. The Australian dollar and the Norwegian crown also shot up versus the dollar.
Republican President Donald Trump’s administration has proposed a coronavirus stimulus package to House Democrats worth more than $1.5 trillion, and hopes are rising that both parties will reach a compromise. At the same time, jobs figures that showed U.S. private employers stepped up hiring more than forecast last month and that Midwest manufacturing grew faster than expected also fed into the optimism.
Along with strong U.S. labour and manufacturing data, the mood pulled the dollar down to 93.61 against a basket of currencies, its weakest since Sept. 22. The euro zone manufacturing recovery gathered pace last month, according to the final reading of the manufacturing PMI, which came in confirmed at 53.7. The final reading for the manufacturing PMI in Britain was also due. In the euro zone, unemployment is also expected to have picked up in August, according to a Reuters poll. Data is due at 0900 GMT. The euro was last trading at $1.1735, up 0.1% on the day.
The Chinese yuan rose 0.6% at 6.7457 after soaring to 6.7330, its highest since beginning of May 2019. The British pound fell 0.3% against the U.S. dollar at $1.2881. It also shed 0.2% against the euro to trade at 91.08 pence. British and EU trade negotiators have failed to close the gap on state aid, a key element blocking an agreement on post-Brexit trade ties, officials and diplomatic sources with the bloc said as 27 national leaders gather in Brussels on Thursday.
Dollar gives ground as hopes of US stimulus leads traders to riskier currencies, Reuters, Oct 1