The U.S. dollar tumbled down against most of its peers on Thursday amidst fading hopes for a compromise between Democrats and Republicans over additional stimulus for the U.S. economy.
The currency stalled due to a decline in Treasury yields. However, analysts think that this is likely only a temporary setback. They believe that U.S. lawmakers will eventually agree to more stimulus to help the economy recover from Covid-19.
On Thursday, the U.S. dollar index decreased by 0.2% against a basket of major currencies in Asia. Despite that, it was still above the two-year low it reached last week.
Masafumi Yamamoto, the chief currency strategist at Mizuho Securities in Tokyo, stated that the greenback needs positive news on stimulus to gain further. He also added that the authorities will get there as politicians can’t go back to their constituencies empty-handed. And once this happens, gains in the dollar/yen pair could be a catalyst for the greenback’s gains against other currencies.
The dollar plummeted down to $1.1813 against the euro, adding to a 0.4% decline on Wednesday. The British pound surged by 0.25% to $1.3067 versus the U.S. currency.
Furthermore, the dollar decreased by 0.2% against the Swiss franc to 0.9105. And it pulled back from a three-week high versus the Japanese Yen to trade at 106.65 yen. The onshore Chinese yuan briefly jumped to a five-month high before steadying at 6.9380 per dollar.
What about the Australian and New Zealand dollars?
The Australian dollar soared after better-than-expected jobs data eased worries about a persistent coronavirus outbreak in the country’s second-largest city. The Aussie increased by 0.2% to $0.7176, holding onto gains as data showed the economy created three times as many jobs as analysts expected.
Traders hope that the economy remains resilient in the face of an ongoing outbreak of Covid-19 cases in Melbourne.
Meanwhile, the New Zealand dollar bought $0.6581, steading after the country’s central bank expanded quantitative easing on Wednesday, simultaneously flagging the prospect of negative interest rates.