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Dollar Down, Continuing Decade-Long Losing Streak on U.S. Economic Recovery Doubts

imageForex16 hours ago (Aug 09, 2020 10:25PM ET)

(C) Reuters.

By Gina Lee – The dollar was down on Monday morning in Asia, despite Friday’s better-than-expected U.S. payrolls report which pushed Treasury yields higher.

Non-farm payrolls rose by 1.763 million in July, against the estimated 1.6 million increase. The unemployment rate also fell to 10.2% in July, compared to June’s reading of 10.5%.

But continuing doubts over the U.S. economic recovery remain, with the U.S. surpassing the grim milestone of five million COVID-19 cases as of August 10, according to Johns Hopkins University. The dollar’s longest losing streak in a decade has also left a structural gap in much of the market for the currency, as well as leaving it vulnerable to a squeeze on any positive news.

“Our portfolio has been positioned for a number of weeks now for a narrowly weaker USD as a consequence of the independent surge in COVID-19 infections in the U.S. that has opened up a decent gap in near-term economic performance, especially against Europe,” analysts at JPMorgan (NYSE:JPM) in a note.

Meanwhile, U.S. President Donald Trump kept his promise to take executive action if the U.S. Congress failed to reach a consensus over the country’s latest stimulus measures. Trump signed four executive orders on Sunday related to COVID-19 economic relief, unemployment benefits, a temporary payroll tax deferral, eviction protection and student-loan relief.

House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin also said on Sunday said they were open to continuing talks for further COVID-19 stimulus measures.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies was down 0.11% to 93.308 by 10:16 PM ET (3:16 AM GMT).

The USD/JPY pair fell 0.12% to 105.78. Japanese markets were closed for a holiday.

The AUD/USD pair gained 0.21% to 0.7172 and the NZD/USD pair was up 0.06% to 0.6606.

The USD/CNY pair rose 0.05% to 6.9697. China reported a better-than-expected consumer price index for July, with a 0.6% increase month-on-month and a 2.7% increase year-on-year. The producer price index also beat expectations, although it shrank 2.4% year-on-year in July.

Investors are also keeping an eye on simmering U.S.-China tensions after the U.S. imposed sanctions on senior Hong Kong and Chinese officials, including Hong Kong’s Chief Executive Carrie Lam, on Friday. Officials from both sides are still scheduled to meet to discuss trade later in the week, on August 15.

The GBP/USD pair gained 0.18% to 1.3074.

Dollar Down, Continuing Decade-Long Losing Streak on U.S. Economic Recovery Doubts

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