FOREX-Dollar muted as stimulus hopes fade ahead of U.S. election

By John McCrank
NEW YORK, Oct 6 (Reuters) - The dollar was little changed on
Tuesday, as investors waited for developments on whether
lawmakers in Washington could reach a compromise on new stimulus
to support the economic recovery from the coronavirus pandemic
ahead of next month's election.
U.S. House of Representatives Speaker Nancy Pelosi and
Treasury Secretary Steven Mnuchin were expected to speak by
phone again on Tuesday on economic relief after speaking for
about an hour on Monday, continuing their recent flurry of
activity working towards a deal on legislation. But the dollar remained rangebound against a basket of six
major currencies, last sitting at 93.407 =USD , as expectations
for a deal were muted. The greenback has fallen around 1% from a
two-month high reached at the end of September, in contrast with
U.S. equity markets, which rose.
"Pretty much everybody has given up on the idea that we are
going to have a fiscal spend before the election, so then it's
really a matter of how the dollar is going to react post
election," said Boris Schlossberg, managing director of FX
strategy at BK Asset Management.
Efforts by Congress to reach an agreement on relief funds
have been further complicated by the spread of the coronavirus
among key policymakers including U.S. President Donald Trump.
Trump on Monday returned to the White House after a
three-day stay in a military hospital where he was receiving
treatment for COVID-19, a development viewed as reducing
political uncertainties, which helped lift global stocks to more
than a two-week high. The lead taken by Democratic presidential nominee Joe Biden
in polls is seen as weighing on the U.S. currency.
"The increasing possibility of a "blue wave" (Democratic
control of the White House and Congress) that would open the
door for much-needed fiscal stimulus would be a welcome
development for risk assets and could undermine the U.S.
dollar," said Lee Hardman, currency analyst at MUFG.
Euro/dollar was up 1.3% at $1.1796 EUR=EBS . The British
pound fell 0.12% to $1.2961 GBP=D3 , with hopes of a Brexit
deal keeping the currency close to $1.30. The dollar was 0.04%
weaker versus the Japanese yen at 105.68 JPY=EBS .
Among currencies that are not included in the dollar index,
the offshore Chinese yuan weakened 0.2% to 6.7325 per dollar
CNH=D3 , having hit on Monday its highest level since April of
last year.
On the data front, the U.S. trade deficit surged 5.9% in
August to $67.1 billion, the largest in 14 years as imports
climbed again, suggesting that trade could be a drag on economic
growth in the third quarter. All eyes later on Tuesday will be on an address by Federal
Reserve Chair Jerome Powell at a virtual meeting of the National
Association for Business Economics, where global central bankers
are likely to present their plans about how much more they can
do to prevent an economic depression. The Australian dollar reversed the gains it made after the
Reserve Bank of Australia kept interest rates on hold at 0.25%,
despite widespread expectations of a rate cut. It was last
trading at $0.7161, down 0.25% on the day AUD=D3 .
Australia will spend A$4 billion over the next year to pay
businesses that hire those under the age of 35, Treasurer Josh
Frydenberg said on Tuesday, part of an ambitious plan to boost
jobs and growth. ========================================================
Currency bid prices at 9:34AM (1334 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1796 $1.1781 +0.13% +5.23% +1.1807 +1.1766
Dollar/Yen JPY= 105.6800 105.7200 -0.04% -2.92% +105.7800 +105.5300
Euro/Yen EURJPY= 124.65 124.56 +0.07% +2.21% +124.7300 +124.2100
Dollar/Swiss CHF= 0.9136 0.9153 -0.19% -5.60% +0.9160 +0.9134
Sterling/Dollar GBP= 1.2961 1.2977 -0.12% -2.25% +1.3006 +1.2918
Dollar/Canadian CAD= 1.3265 1.3265 +0.00% +2.15% +1.3273 +1.3242
Australian/Doll AUD= 0.7161 0.7179 -0.25% +2.01% +0.7208 +0.7146
ar
Euro/Swiss EURCHF= 1.0776 1.0784 -0.07% -0.70% +1.0789 +1.0769
Euro/Sterling EURGBP= 0.9100 0.9077 +0.25% +7.64% +0.9126 +0.9061
NZ NZD= 0.6648 0.6645 +0.05% -1.31% +0.6657 +0.6625
Dollar/Dollar
Dollar/Norway NOK= 9.2034 9.2159 -0.14% +4.84% +9.2462 +9.1802
Euro/Norway EURNOK= 10.8580 10.8500 +0.07% +10.37% +10.8967 +10.8320
Dollar/Sweden SEK= 8.9003 8.9009 +0.16% -4.78% +8.9262 +8.8782
Euro/Sweden EURSEK= 10.4994 10.4831 +0.16% +0.29% +10.5190 +10.4761