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Oct 14, 2020

Currencies | The Dollar: Dollar fades after best day in three weeks; euro touches nine-day low

 

3 minutes - Source: CNBC


A Chinese bank employee counts 100-yuan notes and U.S. dollar bills at a bank counter in Nantong in China's eastern Jiangsu province on August 6, 2019.

A Chinese bank employee counts 100-yuan notes and U.S. dollar bills at a bank counter in Nantong in China’s eastern Jiangsu province on August 6, 2019.

STR | AFP | Getty Images

The dollar index retreated on Wednesday, a day after notching its biggest daily percentage gain in three weeks and the euro touched a nine-day low, as global equity markets remained cautious in light of waning hopes for a COVID-19 vaccine or U.S. fiscal stimulus.

The dollar jumped on Tuesday on concerns about the length of time before a COVID-19 vaccine would be available and on diminishing expectations a fresh fiscal stimulus package would be agreed upon in the United States before the Nov. 3 presidential election.

Senate Majority Leader Mitch McConnell said on Tuesday the Republican-led U.S. Senate would vote next week on a targeted, $500 billion coronavirus economic aid bill of the type Democrats already have rejected as they hold out for trillions in relief.

“Right now the dollar is simply going back and forth on stimulus news, and it is not going very far,” said Joseph Trevisani, senior analyst at FXStreet.com.

The greenback extended declines after data showed the U.S. producer price index for final demand rose 0.4% in September, topping the 0.2% forecast, after advancing 0.3% in August, amid a surge in the cost of hotel and motel accommodation that led to the first year-on-year gain since March.

The dollar index fell 0.232%. The pound fell as low as $1.2865 as hopes dimmed for a Brexit agreement, before recovering as the European Union and Britain are set to prolong talks past a mid-October deadline to try to bridge persistent gaps holding up a new agreement, according to sources and documents.

“For the pound it is pretty much Brexit - Boris says something good, it goes up, Boris says something bad, it goes down. It doesn’t seem to be reacting terribly to the coronavirus,” said Trevisani.

Sterling was last trading at $1.3046, up 0.87% on the day.

Euro zone industrial production data showed the rate of recovery slowed sharply in August, in line with expectations.

European nations are extending restrictions well beyond social life to close schools, cancel surgeries and enlist legions of student medics as overwhelmed authorities face their nightmare scenario of a COVID-19 resurgence at the onset of winter.

The euro was up 0.11% to $1.17575.

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