FOREX-Dollar eases on cautious optimism around U.S. fiscal package

By John McCrank
NEW YORK, Oct 19 (Reuters) - The dollar edged lower on
Monday as investors were cautiously optimistic that an agreement
in Washington on a fiscal stimulus package could be reached
ahead of the Nov. 3 U.S. election, and that a coronavirus
vaccine will be ready by year-end.
The dollar index =USD declined 0.3%, giving back some of
its 0.7% gain from last week when a global surge in coronavirus
cases and an impasse over the stimulus package stoked caution.
The softness in the safe-haven greenback came after House
Speaker Nancy Pelosi said that she believed stimulus legislation
could be pushed through before Election Day, while acknowledging
an agreement would have to come by Tuesday for that to happen.
"There is growing optimism that there is going to be one
last strong attempt to get a stimulus deal," said Edward Moya,
senior market analyst at Oanda in New York.
The markets "are not holding their breath, but there's hope
that once we get past the election, something will be able to
get done so that we don't have to wait until February, which
would be way too long for a lot of small businesses and
families," he said.
The dollar index traded in a tight range of 93.207 to
93.767, and from a technical perspective, is likely to remain
range-bound this week, said Marc Chandler, chief market
strategist at Bannockburn Global Forex.
Boosting overall market sentiment, drugmaker Pfizer Inc
PFE.N said on Friday it could potentially have a coronavirus
vaccine ready in the United States by the end of the year.
Elsewhere, sterling rose 0.22% versus the dollar to $1.2952
GBP=D3 as hopes grew that British and European negotiators
might be able to salvage post-Brexit trade talks.
"It could well be the case that an agreement will be reached
at the last hour, as markets appear to be expecting, but the
lack of progress seen recently highlights the distinct
possibility that no deal is achieved," ANZ Research said in a
client note.
Euro/dollar rose 0.44% to $1.1770 EUR=EBS , while
dollar/yen dipped 0.03% to 105.38 JPY=EBS .
Asia's trade-exposed currencies held firm on Monday as data
showed China's economic rebound from the pandemic accelerated in
the third quarter, with the yuan surging to a fresh 1-1/2-year
high against the dollar.
China's gross domestic product grew 4.9% in the period ended
Sept. 30 from a year earlier, slower than analysts' forecast,
but faster than the second quarter and helped by strong gains in
industrial output and a rise in retail sales. The Chinese currency touched 6.6737 against the U.S. dollar
in the offshore market CNH=EBS , its strongest since March
2019, before easing back 0.29%.
The yuan has benefited in the last few months from hopes
that Democrat Joe Biden will win the presidential election, as
he is seen as less of a threat to U.S.-China relations than
Republican President Donald Trump.
Lee Hardman, currency analyst at MUFG, said "the renminbi,
other Asian and commodity-related currencies should continue to
benefit," noting that the spread of COVID-19 in Asia remains
more contained than in the rest of the world and that points to
"a continuation of cyclical outperformance" there.
The Australian dollar dipped 0.18% to $0.7066 AUD=D3 ,
while the New Zealand dollar firmed 0.08% to $0.6609 NZD=D3 .
New Zealand Prime Minister Jacinda Ardern won re-election on
Saturday, delivering the biggest election victory for her
center-left Labour Party in half a century.

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Currency bid prices at 2:49PM (1849 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.1770 $1.1718 +0.44% +4.99% +1.1794 +1.1704
Dollar/Yen JPY=D3 105.4450 105.3950 +0.00% -2.97% +105.4950 +105.3500
Euro/Yen EURJPY= 124.11 123.48 +0.51% +1.77% +124.3300 +123.3700
Dollar/Swiss CHF=EBS 0.9100 0.9152 -0.56% -5.95% +0.9165 +0.9091
Sterling/Dollar GBP=D3 1.2952 1.2920 +0.22% -2.38% +1.3024 +1.2888
Dollar/Canadian CAD=D3 1.3177 1.3184 -0.03% +1.45% +1.3191 +1.3151
Aussie/Dollar AUD=D3 0.7066 0.7078 -0.18% +0.69% +0.7115 +0.7065
Euro/Swiss EURCHF= 1.0710 1.0716 -0.06% -1.31% +1.0728 +1.0711
Euro/Sterling EURGBP= 0.9084 0.9071 +0.14% +7.45% +0.9090 +0.9024
NZ NZD=D3 0.6609 0.6605 +0.08% -1.77% +0.6646 +0.6605
Dollar/Dollar
Dollar/Norway NOK=D3 9.3360 9.3855 -0.61% +6.34% +9.3800 +9.2700
Euro/Norway EURNOK= 10.9913 10.9875 +0.03% +11.72% +10.9953 +10.9228
Dollar/Sweden SEK= 8.8307 8.8475 +0.31% -5.53% +8.8578 +8.7824
Euro/Sweden EURSEK= 10.3937 10.3612 +0.31% -0.72% +10.3975 +10.3390