On Monday, the US Dollar Index (DXY) measured against a basket of six major currencies had been little changed as possibilities of a large-scale pandemic stimulus bill appeared to have whacked away after the US President Donald Trump had called for the US Congress on Saturday to back a downsized pandemic relief bill, while Chinese Yuan had witnessed its steepest intra-day plunge since mid-March following a reserve requirement policy change from the People’s Bank of China’s (China’s Central Bank).
In point of fact, the US Dollar Index remained range-bound over the recent weeks and went back and forth between a range of roughly 2 per cent as negotiations over a second-round of trillion-dollar pandemic relief bill had been continuing.
Apart from that, since a fiscal stimulus means further policy easing for the corporate taxpayers alongside small-businesses that could ramp up investors’ optimism for riskier assets and ratchet up pressures on US Dollar, fiscal stimulus is usually seen as a negative outlook for the American currency.
Amid such compounding narratives, the Trump Administration had called on the US Congress on Sunday in order to pass a downsized pandemic relief bill, which was developed by capitalizing on a surplus of an expired small-loan business.
US Dollar holds on to three-week lows as Senaors back Trump’s proposal
Citing statistics, on Monday’s FX market closure, the US Dollar index fell by 0.05 per cent to 93.07, while the offshore Chinese Yuan dropped 0.76 per cent against its American counterpart after the China’s Central Bank had been quoted saying that it would reduce reserve requirement ratio for the regional lenders during exercising foreign exchange trading.
Apart from that, the China-trade sensitive Australian Dollar fell 0.4 per cent and the bloc’s common currency had wrapped up the day 0.18 per cent lower to $1.1810 against its American peer. Besides, the safe-haven Japanese Yen shed 0.24 per cent to 105.36 per Dollar, while the British currency was up 15 per cent to $1.3065 Meanwhile, adding that the American currency would likely to remain softer over the coming weeks, a senior market analyst at Western Union Business Solutions in Washington DC, Joe Manimbo said on the day’s FX market closing bell, “The dollar just retains this soft underbelly on expectations that sooner or later there will be some stimulus out of Washington.
At the same time, if you look at some of the election developments, the polls are trending in a way that is reducing worries about a contested outcome, that is more risk positive and therefore dollar negative”