US Dollar Dips on Chinese Data, Riskier Currencies Soar

US dollar fell sharply on Monday after news that Chinese gross domestic product grew 4.9% in the third quarter, driven by robust industrial and retail sales growth. Asian currencies soared after the reports of acceleration in the Chinese economy.
The Yuan and risk-sensitive currencies are higher against the greenback on Monday while the euro also erased last week’s losses. The yuan has hit fresh eighteen months high against the greenback early today before sliding to 6.6982 per dollar.
“China’s economy remains on the recovery path, driven by a rebound in exports. Consumer spending is also headed in the right direction, but we cannot say it has completely shaken off the drag caused by the coronavirus,” said Yoshiko Shimamine, chief economist at Dai-ichi Life Research Institute in Tokyo.
The rebound in stock markets has added to the US dollar price selloff.
Equities jumped on Monday amid hopes of a stimulus package. This is because President Trump stated on Sunday that he wants to give a bigger package. The president says he could quickly convince Republicans to get on board.
The rising coronavirus infections are also paving the path for a new package. Daily coronavirus infections came around 70,000 on Saturday. This represents the largest daily increase since July.
The USD index, which tracks the US dollar against the basket of six major currencies, is trading around 93.40 level on Monday after hitting the 93.90 mark on Friday. The gold price jumped above the $1900 level on weaknesses in the US dollar value.
“The main risk for markets now would be a tightening in polls, which would reduce the likelihood of a large Democratic fiscal stimulus package and could raise the likelihood of a long-contested election.”
The British Pound has been outperforming the US dollar and common currency as UK Prime Minister Boris Johnson stated last week that they would walk away from talks without a big change in Brussels position.