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Dollar Retreats as Congressional Bickering Over Stimulus Package Continues

imageForexAug 12, 2020 10:00PM ET

(C) Reuters.

By Gina Lee – The dollar was down on Thursday morning in Asia, reversing its gains from the day before over the U.S. Congress’ inability to reach a consensus for the country’s latest COVID-19 stimulus package.

U.S. President Donald Trump went so far as to accuse Democrats on Wednesday of not wanting to negotiate over the package, with Republican and Democratic negotiators trading barbs and blame as negotiations ended without a result for the fifth day.

COVID-19 continues to impact U.S. economic recovery, with almost 5.2 million cases in the U.S. alone as of August 13, according to Johns Hopkins University and millions unemployed.

Although investors have swung between optimism and pessimism over the stalled package, some argued that U.S. economic recovery depended on both sides reaching an agreement.

“The dollar needs positive news on stimulus to rise further, but I’m sure we’ll get there, because these politicians can’t go back to their constituencies empty handed,” Masafumi Yamamoto, chief currency strategist at Mizuho Securities, told Reuters.

“Once this happens, gains in dollar/yen could be a catalyst for dollar gains against other currencies.”

The U.S. Dollar Index that tracks the greenback against a basket of other currencies was down 0.18% to 93.237 by 9:52 PM ET (2:52 AM GMT).

The USD/JPY pair fell 0.17% to 106.70.

The AUD/USD pair was up 0.08% to 0.7167, with the Australian Bureau of Statistics releasing a positive jobs report for July earlier in the day. The report said that 114,700 jobs were added in July, beating analyst expectations of 40,000 jobs prepared by July’s unemployment rate of 7.5% also beat expectations.

But the country’s fight against COVID-19 goes on, although the country was poised to report its lowest one-day rise in the number of cases in more than three weeks on Thursday.

The battle against the virus also continues across the Tasman sea, with New Zealand reporting 14 new cases on Thursday. The NZD/USD pair inched up 0.01% to 0.6578.

The USD/CNY pair was up 0.03% to 6.9383, with Chinese officials widely expected to bring up Trump’s ban of the TikTok and WeChat apps, due to be enforced in September, during an online meeting with U.S. officials on Saturday. The two sides will also discuss trade, as well as air other grievances, during the meeting.

The GBP/USD pair gained 0.24% to 1.3064.

Dollar Retreats as Congressional Bickering Over Stimulus Package Continues

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