Dollar set for weekly loss amid U.S. stimulus, election uncertainty
The dollar lost a little ground against most currencies on Friday after a measured U.S. presidential debate and headed for weekly losses as investors waited for a breakthrough in stimulus talks in Washington and post-Brexit trade negotiations.
U.S. President Donald Trump adopted a more restrained tone than in the first debate, though exchanges again focused on the handling of the COVID-19 pandemic and personal slights.
The dollar was 0.1% lower against a basket of currencies, just clear of a seven-week low hit on Wednesday. It was down about 0.9% for the week.
A Biden victory, which polls predict, will probably drive further dollar weakness, because he is expected to spend more on coronavirus aid than Trump.
Euro zone bond yields inched lower as business surveys in France and Germany showed the impact of the second wave of COVID-19 infections in the bloc’s two biggest economies.
Despite the data, the euro ticked up 0.2% against the dollar to $1.1844.
Adding to the optimistic mood, chief negotiators for Britain and the European Union reported some progress had been made in Brexit trade talks.
Sterling was just slightly down against the dollar at $1.3070.
The safe-haven yen rose about 0.1% to 104.71 per dollar, paring some losses made on Thursday after U.S. House Speaker Nancy Pelosi said stimulus talks had made progress.
Hopes that Congress might pass a stimulus package before the election and confidence that spending would follow, no matter who gets elected, has driven a sell-off in the bond market in anticipation of inflation and government borrowing.
The Chinese yuan ticked up 0.2% against the dollar after an official at China’s foreign exchange regulator said it has been more stable than expected, suggesting authorities are not too worried about its recent rise.
The yuan has gained about 7.5% since the end of May as China led the global coronavirus recovery.
Reference: CNBC
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