Amid conflicting narratives on whether the White House and the Congressional Democratic lawmakers would be able to rubberstamp a pandemic stimulus deal before the November 3 election day, the US Dollar Index (DXY) measured against a basket of six major currencies on an average soured slightly on Friday, while the greenback had recorded a weekly percentage decline of 1 per cent.
In point of fact, the American currency had been tilting in line with the progresses made over the Capitol Hill regarding a second round of trillion-dollar stimulus package over the recent weeks, while the global FX markets, which is betting heavily on a Biden victory, had jumped on to the bandwagon of a US Dollar sell-off spree on Friday, as White House Economic Advisor Larry Kudlow was quoted saying earlier in the day that there had still been a number of conflict of interests between the bipartisan lawmakers alongside the White House.
Adding further woes, US House Speaker Nancy Pelosi said earlier in the session that a pandemic relief deal with the White House could be made available before the November 3 election day, though the US President Donald Trump would have to get his fellow Republicans on board, who remained utterly reluctant to pass a trillion-dollar relief aid just weeks after the Trump Administration had logged a nearly 80-year-high budget deficit over the fiscal year that ended on September 30.
Nonetheless, investors still believe that a pandemic stimulus bill could be reached before end-2020, which in effect had prompted a sell-off wave for the Greenback.
American Dollar extends plunge on stimulus, election
Citing statistics, while the American Dollar Index fell 0.23 per cent on Friday to 92.70 with further downside momentum appears more likely over the coming week, the US Dollar Index (DXY) had faltered as much as 1 per cent this week, while the bloc’s common currency euro edged higher 0.34 per cent against its American peer to $1.1859.
Nevertheless, amid a growing risk of a no-deal Brexit by December 2020 deadline, the British currency had curbed out 0.37 per cent to $1.3303 on Frida’s FX market closure. Meanwhile, adding that the FX markets had been heavily betting on a Biden Victory alongside a stimulus package as early as end-2020, a senior market analyst at Western Union Business Solutions.
Joe Manimbo said on Friday, “So risk appetite has held the upper hand this week on hopes for a bold stimulus and that has kept the dollar on its back foot. ”