The U.S. dollar and safe-haven Japanese yen tumbled down on Thursday after revived hopes for U.S. fiscal stimulus improved investor sentiment.
It seems House Speaker Nancy Pelosi and President Donald Trump agreed to pursue a stimulus package for the airline industry. However, Trump halted talks with Democrats for a bigger plan.
Investors expect Joe Biden if elected, will also quickly spend money to stimulate growth. Due to such an optimistic outlook, the yen plunged to a three-week low of 106.11. The greenback also struggled to recoup losses against other majors, excluding the New Zealand dollar.
The dollar declined by 0.1% against a basket of currencies. However, the euro climbed to $1.1782, and the risk-sensitive Australian dollar jumped by 0.3% to $0.7163. The Sterling declined by 0.05% at $1.2916.
Marshall Gittler, the head of investment research at BDSwiss, stated that it seems investors are focusing more on the increasing odds of a Biden win and what that might mean for a stimulus package after the election. He added that with that eventuality in mind, Donald Trump’s decision to stop negotiations now is a risk-on move. It increases the likelihood of Biden’s win.
How did the Chinese Yuan and New Zealand dollar fare?
The New Zealand dollar tumbled down as much as half a percent after central bank officials hinted that negative interest rates are possible. However, it rebounded in early deals in London to trade 0.2% higher to the greenback on the day. And the Chinese yuan traded at 6.7898 onshore and sat at 6.7389 in offshore trade.
Meanwhile, UBS Global Wealth Management’s chief investment officer, Mark Haefele, noted that they think policy support will remain strong worldwide as economies continue to recover from coronavirus related disruptions.
On Wednesday, the reports from U.S. Federal Reserve’s September meeting hinted at more easing. Lots of participants had assumed that fiscal spending would support the economy. Some were open to further debate about the agency’s bond-buying program.