Forex-Dollar dips as stocks gain on strong earnings, stimulus hopes

U.S. private payrolls miss expectations in July

  
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 U.S. dollar fell against a basket of currencies on Wednesday as investors' appetite for risk improved on strong corporate earnings and expectations of more stimulus measures for the pandemic-ravaged global economy.

U.S. and European investors piled into stocks on Wednesday as companies in both regions posted a batch of positive earnings reports.

The dollar, a safe-haven currency, typically weakens when investors grow more comfortable holding riskier assets.

On Wednesday, the U.S. Dollar Currency Index, which measures the greenback's strength against six major currencies, last was 0.334% lower at 92.84, but earlier came close to the more than two-year low of 92.593 touched last week.

"Clearly we have seen risk appetite rebound on global markets and sort of a return of the theme of a U.S. underperformance relative to world counterparts," said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto.

U.S. stocks also have become more attractive to overseas investors as the dollar has been pressured in recent weeks by worries about the American economic slide during the coronavirus pandemic.

The dollar extended losses on Wednesday after the ADP National Employment Report, which showed U.S. private payrolls growth slowed sharply in July, suggesting a loss of momentum in the labor market. 

"This morning's weak ADP data suggests we may see further weakness when nonfarm payrolls land on Friday," he said. "That is weighing on the dollar's prospects relative to the other majors."

Against the Swiss franc, the dollar fell to a more than five-year low, and was last trading down 0.6% at $0.9082.

Euro zone business activity returned to modest growth in July as many curbs imposed to stop the spread of the coronavirus were lifted, while official estimates showed retail sales volumes rebounded in June.

Investors also are watching negotiations between the White House and congressional Democrats trying to reach a deal on a relief package. Officials drew lines in the sand on Wednesday after more than a week of discussions, with some saying they viewed Friday as the deadline to reach a deal or drop talks.

The Australian dollar, which tends to rise when risk sentiment improves, was last up 0.47% at $0.7194 against the U.S. dollar.

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Currency bid prices at 3:44PM (1944 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session Euro/Dollar EUR= $1.1861 $1.1800 +0.52% +0.00% +1.1905 +1.1794 Dollar/Yen JPY= 105.5900 105.7000 -0.10% +0.00% +105.8700 +105.3300 Euro/Yen EURJPY= 125.25 124.76 +0.39% +0.00% +125.5100 +124.6400 Dollar/Swiss CHF= 0.9082 0.9132 -0.55% +0.00% +0.9139 +0.9051 Sterling/Dollar GBP= 1.3117 1.3060 +0.44% +0.00% +1.3161 +1.3059 Dollar/Canadian CAD= 1.3265 1.3317 -0.39% +0.00% +1.3330 +1.3233 Australian/Doll AUD= 0.7194 0.7160 +0.47% +0.00% +0.7241 +0.7154 ar Euro/Swiss EURCHF= 1.0774 1.0777 -0.03% +0.00% +1.0793 +1.0763 Euro/Sterling EURGBP= 0.9043 0.9032 +0.12% +0.00% +0.9059 +0.9013 NZ NZD= 0.6642 0.6622 +0.30% +0.00% +0.6673 +0.6619 Dollar/Dollar Dollar/Norway NOK= 8.9565 9.0957 -1.53% +0.00% +9.1056 +8.9206 Euro/Norway EURNOK= 10.6280 10.7361 -1.01% +0.00% +10.7467 +10.6175 Dollar/Sweden SEK= 8.6689 8.7179 -0.08% +0.00% +8.7264 +8.6482 Euro/Sweden EURSEK= 10.2838 10.2916 -0.08% +0.00% +10.3035 +10.2836

(Reporting by Caroline Valetkevitch; additional reporting by Olga Cotaga and Saqib Iqbal Ahmed; editing by John Stonestreet, David Gregorio and Jonathan Oatis) ((caroline.valetkevitch@thomsonreuters.com; +1 646 223 6393; Reuters Messaging: caroline.valetkevitch.thomsonreuters.com@reuters.net))

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