The dollar drifted lower in early European forex trade on Friday. It is on track for a loss of nearly 2% for the week. Heightened optimism that U.S. lawmakers will come together to agree on a new COVID-19 relief package boosts risk sentiment.
The Dollar Index was down 0.1% at 90.638 at 3:55 AM ET (0755 GMT). It was just above the two-and-a-half-year low of 90.504 seen on Thursday.
EUR/USD edged up 0.1% to 1.2155, at its highest level since 2018. Having climbed over 8% this year, this is so far the single currency’s biggest gain since 2007.
The Covid-19 surge continues to hit the United States hard. This week saw 14 million recorded. The record includes the highest number of daily deaths, new infections, and hospitalizations since the pandemic began.
The safe-haven dollar, however, has no benefits from these worries. Optimistic view towards the successful roll-out of vaccines and new fiscal stimulus to boost the U.S. economy has heightened.
In Congress, a $908 billion Covid-19 aid package was gaining traction. Senior Democrat officials are backing the proposal. Mitch McConnell, a Republican hardliner, stated that a deal was within reach as he proposed a smaller package.
The monthly official employment report is due for release later Friday. It may be the catalyst to push the two sides together.
Nonfarm payrolls are expected to increase by 469,000 jobs in November. That is a sharp slowdown from 638,000 jobs added in October.
This follows on from a disappointing ADP jobs report. It showed private payrolls grew at their slowest pace since July.
Forex news reported GBP/USD dropped 0.1% to 1.3443. It climbed $1.35 on Thursday on news that the U.K. and EU have made progress on fishing quotas. This raised hopes that a post-Brexit deal is within sight.
Some of this optimism has retreated, though. These trade talks are in a difficult phase, according to U.K. Business Secretary Alok Sharma on Friday. France threatened to reject any deal it didn’t approve of, suggesting there was still plenty of negotiation to take place.
Furthermore, the new deal on the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, output policy supported oil currencies. Russia’s ruble gained 0.3% to hit a three-month high against the dollar of 74.175.