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Dollar Up, But Gains Capped by U.S. Stimulus Package Stalemate

imageForex18 hours ago (Aug 06, 2020 10:15PM ET)

(C) Reuters.

By Gina Lee – The dollar was up on Friday morning in Asia, reversing some of its losses earlier in the week. But gains were capped by decreasing U.S. Treasury yields, ever-increasing numbers of COVID-19 cases, and the stalemate in the U.S. Congress over the latest stimulus package.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies gained 0.08% to 92.840 by 10:07 AM ET (3:07 AM GMT).

U.S. Treasury Secretary Steven Mnuchin warned that Republicans and Democrats are “still very far apart” on key issues” after concluding talks on Thursday. But he added that President Donald Trump is prepared to issue an executive order if the two sides fail to meet their end-of-the-week deadline.

But some investors are skeptical that the dollar will retain its gains, especially against the EUR and JPY, with hopes of a V-shaped U.S. recovery fading quickly.

“I see further dollar weakness,” Michael McCarthy, chief market strategist at CMC Markets, told Reuters.

“Optimism for an economic recovery is not backed up by the data. Safe-havens are very high, but stocks are also high, which doesn’t make sense. The party has to end at some point.”

The USD/JPY pair inched up 0.01% to 105.56.

The AUD/USD pair fell 0.07% to 0.7228 and the NZD/USD pair was down 0.04% by 0.6683.

The USD/CNY pair gained 0.010% to 6.9592 and the GBP/USD pair was down 0.12% to 1.3131.

Meanwhile investors will be looking to the U.S. non-farm payrolls report, due later in the day, for further clues that the economic momentum is slowing.

Dollar Up, But Gains Capped by U.S. Stimulus Package Stalemate

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