US Dollar is Steady as Investors Awaits News on Trump’s Health
US dollar fell back from previous highs of 94.50 range last week amid investors’ concerns over Donald Trump’s health as the president and the first lady were tested positive last week.
The USD index, which tracks the US dollar against the six major currencies, reported the largest drop in a month on Friday.
The hopes over the second US stimulus package have also provoked investors to move towards risker assets including stocks and the euro. The market analysts believe the federal stimulus program is likely in the coming months.
“Both sides have a lot of signaling, like peacocks walking around. If we don’t get anything before the election, we’ll get something after,” said Marc Chandler, chief market strategist, at Bannockburn Forex in New York.
Republicans have suggested a $1.6 trillion plan while Congressional Democrats have proposed a $2.2 trillion package to help people in dealing with the pandemic.
The US dollar is also impacted by lower than expected job addition. The US has added more than 650,000 jobs last month, down sharply from analysts’ expectations for growth of 800,000 jobs. On the positive side, construction activities in the United States grew in September from the previous month.
The Chinese yuan is among the biggest gainers due to the drop in the US dollar value. The yuan hit a year-and-a-half high as Chinese economic conditions are improving at a robust pace.
Other commodity currencies including the Australian dollar, Canadian dollar, and Norwegian crown also soared last week against the greenback.
The European currency is still struggling to generate sustainable growth because of the second coronavirus wave.
“There is a heightened possibility, especially in Europe, for more localized lockdowns,” said Simon Harvey, FX market analyst, at Monex Europe in London. “And that kind of risk-off filtering into the dollar is very much alive and kicking.”