Dollar Down Over Continued Progress in U.S. Stimulus Measures

Dollar Down Over Continued Progress in U.S. Stimulus Measures

© Reuters.  © Reuters.

By Gina Lee – The dollar was down on Tuesday morning in Asia, staying near two-and-a-half-year lows as progress on the latest U.S. stimulus measures increased risk appetite.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies was down 0.24% to 90.058 by 11:28 PM ET (4:28 AM GMT). The dollar hovered near the 89.723 level reached on Dec. 17, a level last seen in April 2018.

The House of Representatives voted to increase the amount of stimulus checks to qualified Americans from $600 to $2,000 on Monday, with the Senate preparing to vote on the increased amount.

The post-Brexit trade deal reached between the European Union (EU) and the U.K. during the previous week also increased investors’ risk appetite. Although the agreement was lacking in detail, the improved outlook for global growth and economic recovery from COVID-19 saw gains in global shares.

Some investors expected the dollar’s decline to continue.

“Optimism abounds, and it’s generally coming from equity markets. The dollar is very heavy, and that will continue into next year,” State Street (NYSE:STT) Bank and Trust Tokyo Branch manager Bart Wakabayashi told Reuters.

The USD/JPY pair inched down 0.09% to 103.69.

The AUD/USD pair was up x0.24% to 0.7595 and the NZD/USD pair gained 0.28% to 0.7118. Both Antipodean markets re-opened after a holiday on Monday.

The USD/CNY pair inched down 0.04% to 6.5318.

The GBP/USD pair gained 0.30% to 1.3489. The pound reversed two days of decline, and even saw a high of $1.3625 earlier in the month, a level it has not reached since May 2018.

Investors took profits in the U.K. currency as the Brexit deal, already widely expected, was confirmed just before the Christmas holidays.

Although investors breathed a sigh of relief as the agreement came before the end-of-year deadline, there were arguments that the deal leaves the U.K. more detached from the EU.

Investors are also still figuring out what the agreement means for the pound.

“People are still trying to figure out what this Brexit agreement means,” weighing on the pound, said State Street’s Wakabayashi.

The fact that the deal does not cover the financial markets is also a nagging concern.

“Nothing has really been agreed on financial markets, and that’s a big negative for the U.K.,” Wakabayashi added.

Meanwhile, the euro inched up 0.1% to $1.22260 earlier in the session, hovering near the two-and-a-half-year high of 1.22735 seen earlier in the month.

Original Article

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