Dollar dips on stimulus optimism, bets on Biden victory

The euro rose 0.45% to $1.1811

  
An employee counts U.S. dollar bills at a money exchange office in central Cairo, Egypt, March 20, 2019. Image for illustrative purposes.

An employee counts U.S. dollar bills at a money exchange office in central Cairo, Egypt, March 20, 2019. Image for illustrative purposes.

REUTERS/Mohamed Abd El Ghany

NEW YORK - The dollar fell to three-week lows on Friday as optimism that a deal for new U.S. stimulus would be reached, and as investors bet that Democrat Joe Biden is more likely to win the U.S. presidency and offer a larger economic package.

After stalling talks with Democrats on a comprehensive aid package earlier this week, U.S. President Donald Trump on Thursday called for a "skinny" relief bill that would include elements such as direct payments and a bailout of the struggling airline sector. 

Senate Majority Leader Mitch McConnell said another rescue package was needed but noted "vast differences" over costs. U.S. House of Representatives Speaker Nancy Pelosi said legislation to help airline companies could only move through Congress with guarantees that a comprehensive aid bill would be developed too. 

“It seems like, at least in the White House, there is more of a sense of urgency that it needs to be done,” said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto. However, “the key question for us is whether or not the Senate Republicans are going to go with it … they don’t seem to be united.”

“I think we’re more or less in a standstill until we get some more clarity on whether or not this stimulus package is going to go through,” Rai said.

The dollar index against a basket of major currencies fell 0.34% to 93.23, the lowest since September 21. It has held within a range from 91.74 to 94.75 since late July.

The euro rose 0.45% to $1.1811. The greenback weakened 0.16% against the Japanese yen to 105.84 yen.

The U.S. currency also fell on rising expectations that Biden will win the Nov. 3 election, and that Democrats could win the Senate. A Democratic victory would likely result in larger stimulus, which would be negative for the dollar.

Rising expectations of a Biden victory has also boosted appetite for currencies that have been hurt by the trade war between Washington and Beijing, with the Chinese currency the biggest beneficiary.

The offshore yuan strengthened to 6.6801, the strongest since April 2019.

The pound was steady, brushing off worse than expected UK growth data as investors became more optimistic about a Brexit deal being reached ahead of a key European Council summit next week.

Sterling was last up 0.29% at $1.2970.

========================================================

Currency bid prices at 9:24AM (1324 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session Euro/Dollar EUR= $1.1811 $1.1758 +0.45% +5.36% +1.1817 +1.1754 Dollar/Yen JPY= 105.8400 106.0100 -0.16% -2.77% +106.0400 +105.8200 Euro/Yen EURJPY= 125.00 124.69 +0.25% +2.50% +125.0900 +124.5300 Dollar/Swiss CHF= 0.9116 0.9167 -0.56% -5.81% +0.9177 +0.9116 Sterling/Dollar GBP= 1.2970 1.2933 +0.29% -2.18% +1.2976 +1.2922 Dollar/Canadian CAD= 1.3141 1.3194 -0.40% +1.19% +1.3202 +1.3132 Australian/Doll AUD= 0.7213 0.7166 +0.66% +2.73% +0.7218 +0.7161 ar Euro/Swiss EURCHF= 1.0770 1.0780 -0.09% -0.76% +1.0789 +1.0769 Euro/Sterling EURGBP= 0.9107 0.9087 +0.22% +7.72% +0.9131 +0.9077 NZ NZD= 0.6638 0.6572 +1.00% -1.45% +0.6642 +0.6576 Dollar/Dollar Dollar/Norway NOK= 9.1798 9.2623 -0.89% +4.57% +9.2751 +9.1786 Euro/Norway EURNOK= 10.8450 10.8940 -0.45% +10.24% +10.9109 +10.8413 Dollar/Sweden SEK= 8.8142 8.8565 -0.11% -5.70% +8.8736 +8.8136 Euro/Sweden EURSEK= 10.4087 10.4202 -0.11% -0.58% +10.4510 +10.4110

(Additional reporting by Saikat Chatterjee in London Editing by Nick Zieminski) ((karen.brettell@tr.com))

More From Currencies