On Thursday, an apparently death-crossed American currency that has been caught between a tug of war of a vaccine hope and a record spike in pandemic cases across the United States, slipped for the six consecutive sessions in a row as media reports on a potential resumption of talks over US stimulus package had shored up investors’ appetite for riskier currencies and commodities, darkening outlook for an ailing American currency further.
In point of fact, the American currency had traded most of the session in an affirmative territory over frets of another round of forced business closures, as a wintry chill had been witnessing a record number of pandemic cases in the world’s largest economy.
If truth is to be told, prior to the November 3 US Presidential election, FX markets had been following a zig-zag pattern with optimism entirely focusing on the prospects of the likelihood of another trillion-dollar pandemic stimulus bill, nonetheless, followed by the triumph of President-elect Joe Biden who has been expected to take over the White House by January 20, 2021, market participants were shrugging off hopes of a stimulus package in context of a vengeful Trump Administration which had yet to concede a defeat in the Presidential election.
Nonetheless, in late-afternoon trading on Thursday, FX traders seemed to have turned entirely against the greenback following remarks from the Senate minority leader Chuck Schumer, while media reports had quoted Schumer as saying that he had reached an accord with the Senate majority leader Mitch McConnel to resume negotiations over a pandemic relief fund, which in effect had torpedoed the American currency against a basket of six major currencies and had led to an abrupt upsurge in US stocks.
Dollar extends losing run on renewed stimulus hope
Citing statistics, on Thursday’s FX market closure, the safe-haven Japanese Yen which had gained as much as 1.4 per cent following reveal of Pfizer Inc.’s encouraging vaccine trial result, was little changed at 103.81 yen per US Dollar, while commodity-driven loonies such as Australian Dollar and Norwegian Krona had pared earlier losses.
Concomitantly, despite rapidly soaring pandemic cases which had already overwhelmed the US healthcare services, US Dollar Index (DXY) fell 0.2 per cent to 92.29 against a basket of six major currencies on an average, while the eurozone’s common currency gained 0.2 per cent to $1.1875 against its American counterpart.
Meanwhile, referring to a US stimulus optimism driven late-session plunge in the American currency, a Chief Market Strategist at Bannockburn Forex, Marc Chandler said, “The euro bottomed out against the dollar hours ago and technically when we got above $1.1850, the move higher accelerated.
I think the market is relatively thin and when the Schumer news hit, it further opened the door. The market is still sensitive to news about the stimulus. ”