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Dollar was Flat on Thursday

 

The dollar index was almost flat against a basket of currencies at 92.792 on Thursday, reaching its lowest level since Sept. 2 overnight. U.S. stimulus talks remained the focus for markets. Meanwhile trading was buffeted over the past days by the extent of progress made on the potential size of the stimulus package.

 

On Wednesday, the greenback plunged to a seven-week low after U.S. President Donald Trump and House Speaker Nancy Pelosi bolstered hopes that an agreement on stimulus is close, sparking traders’ demand for riskier assets.

 

Daisuke Karakama, the chief market economist at Mizuho Bank, stated that for a while, when stimulus talks stalled, equities dropped and the greenbacks purchases occurred due to risk-averse sentiment. However, with optimistic headlines like these, the pattern changed. It seems the market is inclined to shift to risk-on mood and sell the dollars.

 

However, the Republican-controlled Senate likely won’t approve any aid before the Nov. 3 election due to President Trump’s accusation to Democrats about their being unwilling to craft an acceptable compromise on stimulus.

 

Meanwhile, Federal Reserve Governor Lael Brainard stated that if fiscal support from the federal government were withdrawn too soon, it would be the biggest risk to her outlook for economic recovery.

How did Euro and Sterling Fare?

 

Analysts think that the dollar received pressure by a surge in currencies such as the British Pound. The Sterling skyrocketed to a six-week high overnight. This occurred after Britain’s chief Brexit negotiator announced that talks with the European Union would resume on Thursday afternoon. However, in Asian trade, the pound’s rise paused, and it last traded lower by 0.15% at $1.3127.

 

Analysts at Maybank in Singapore noted that they believe it is in both E.U. and U.K.’s interests to strike a deal as disruption to trade can affect Europe. Furthermore, the resurgence of coronavirus in Europe, including within the U.K. could increase the need for a deal to avoid further economic impact on both sides.

 

Meanwhile, the euro tumbled down by 0.16% to $1.1842 against the dollar. It fell a fraction below a one-month high of $1.18805 reached on Wednesday.

 

What about the other currencies?

 

The Japanese yen also lowered from its four-week high of 104.345 reached overnight. At the last trading it fell at 104.74 against the greenback.

 

The Australian dollar declined as E-mini futures for the S&P 500 plunged by more than 0.7%. The currency was also vulnerable to further policy easing from the Reserve Bank of Australia.

The Aussie last traded at A$0.7090, while the New Zealand dollar pulled back slightly to 0.6645. Still, the kiwi held above the near two-week low it touched on Tuesday.

 

Furthermore, the Chinese yuan dropped, at last trading at 6.6669 at midday, after reaching its strongest level since July 2018.

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