The dollar weakened against riskier currencies on Tuesday due to the hopes that U.S. lawmakers will agree on new stimulus. Furthermore, U.S. President Donald Trump left the hospital and returned to the White House after getting treatment for COVID-19. That also boosted positive sentiment.
Masafumi Yamamoto, the chief currency strategist at Mizuho Securities, thinks that hopes of U.S. stimulus are the main driving force. According to him, the impact of Trump’s discharge is not clear-cut. Still, it seems positive for the risk environment to the extent that there are fewer concerns about the White House getting caught in complete chaos and unable to make decisions.
The dollar’s index tumbled down to 93.381 against a basket of six major currencies, reaching its lowest level in two weeks. However, the greenback gained against the safe-haven Japanese yen to 105.66 yen, remaining near its highest levels in three weeks.
Treasury Secretary Steven Mnuchin and U.S. House Speaker Nancy Pelosi spoke by phone for about an hour on Monday on Covid-19 economic relief. They were preparing to talk again on Tuesday, continuing their recent flurry of activity working towards a deal on legislation.
White House Chief of Staff Mark Meadows stated that there is still potential for an agreement among lawmakers in Washington on more economic relief. Furthermore, Trump is committed to getting the deal done.
How did the Euro and Sterling fare?
The euro traded at $1.1792 on Tuesday, following a gain of 0.58% on Monday. The British Pound stood at $1.2990 despite concerns about a no-deal Brexit.
Meanwhile, the offshore Chinese yuan maintained its strength at 6.7281 per dollar after hitting its highest level since April last year on Monday.
The Australian dollar also surged forward by 0.3% to $0.7205. The Reserve Bank of Australia kept interest rates on hold at 0.25%, even though investors expected a rate cut. Currency traders are focused on the government’s annual budget with Canberra.