US dollar is steady as it’s clear that no stimulus is possible ahead of the election. The deadlock between both parties’ enhanced investors focus on the safe-haven assets and dropped the confidence in risker assets including stocks and European currency.
The USD index, which tracks the US dollar against the basket of six currencies, is trading around 93.30 level on Wednesday. The index traded around 92.90 mark last week. Euro continues to trade around the $1.17 level against the US dollar.
The concerns about the coronavirus vaccine increased after Johnson & Johnson paused the COVID-19 study due to unexplained reasons. Eli Lilly has also paused its clinical trial for antibody treatment. The shares of both companies plunged sharply after the news.
“Many factors are pointing to more upside for the dollar,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities. “U.S. stimulus may not come until after the election. The People’s Bank of China is halting the yuan’s rise. There’s no reason to buy the euro, and there are a lot of euro longs that need to be unwound.”
Wall Street slid in Tuesday trading but shares regained the upside momentum in Wednesday trading, which could negatively impact the US dollar. Strong earnings reports and higher price targets from analysts supported the gains despite concerns over the stimulus package.
Shares of Goldman Sachs soared more than 3% after the company topped earnings expectations by a wide margin. Its net revenue jumped 30% from the past year quarter to $10.8 billion.
Gold price recovered some earlier losses on Wednesday as the yellow metal is trading above the $1900 level. However, analysts believe the precious metal will rally in the long-term due to widening budget deficits. The polls are predicting Joe Biden’s win in election polls. Biden has promised to present a big stimulus package for Americans after the election.