By John McCrank and Saqib Iqbal Ahmed
NEW YORK, Oct 21 (Reuters) - The dollar hit a seven-week low
against a basket of currencies on Wednesday after U.S. President
Donald Trump and House Speaker Nancy Pelosi boosted hopes for a
large fiscal stimulus package, prompting some traders to ramp up
bets on riskier currencies.
The U.S. dollar index =USD was 0.47% lower at 92.605, its
lowest since Sept. 2.
"We've entered a secular bear market for the dollar," said
Axel Merk, president and portfolio manager at Merk Hard Currency
Fund in Palo Alto, California.
The weakness in the greenback came as the White House and
Democrats in the U.S. Congress moved closer to agreement on a
new coronavirus-related aid package on Tuesday as Trump said he
was willing to accept a large aid bill despite opposition within
his own Republican Party. Pelosi, the nation's top Democratic leader, later said she
was optimistic about chances for a fresh aid deal despite
resistance from Senate Republicans, though she acknowledged it
might not pass until after the election.
The economic recovery has been uneven and uncertain and will
require continued support from the government to ensure it
becomes broadbased and sustainable, said Federal Reserve
Governor Lael Brainard. Still, there is a good chance that no large-scale fiscal
relief will be passed until the first quarter of next year, if
Democrats sweep the Nov. 3 elections, Shaun Osborne, chief FX
strategist at Scotiabank in Toronto, said in a note.
The greenback slipped to a four-week low against the yen,
with the Japanese currency set to log its best one-day gain
since Aug. 28. JPY=EBS
"Real interest rates in Japan are the highest in the G10
right now," said Merk.
As the U.S. economy accelerates, something that might not
happen for months or even a year, and the Fed is committed to
keeping rates low, real U.S. interest rates are going to go down
further, faster than in other countries, Merk said. And with
that, the dollar should weaken further.
The riskier New Zealand and Australian dollars both
advanced, with the Kiwi up 1.32% and the Aussie up 1.11% versus
the greenback. NZD=D3 AUD=D3
China's yuan surged, in both offshore and onshore trading,
led by firmer central bank guidance and recent data suggesting a
more sustained recovery in the world's second-largest economy.
CNH=
Sterling GBP=D3 vaulted to a six-week high against the
U.S. dollar after Britain's chief Brexit negotiator David Frost
said negotiations with the European Union will resume on
Thursday afternoon. "Sterling rallied strongly on the news and further gains
can't be ruled out near term, despite the growing probability
that UK interest rates will go negative next year and
Westminster abandoning its three-year public spending plans,"
ANZ Research said in a note to clients.
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Currency bid prices at 3:01PM (1901 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.1862 $1.1821 +0.34% +5.80% +1.1881 +1.1823
Dollar/Yen JPY=D3 104.5250 105.4700 -0.83% -3.71% +105.5200 +104.3750
Euro/Yen EURJPY= 123.98 124.71 -0.59% +1.66% +124.8300 +123.9200
Dollar/Swiss CHF=EBS 0.9047 0.9071 -0.26% -6.51% +0.9070 +0.9031
Sterling/Dollar GBP=D3 1.3162 1.2947 +1.64% -0.78% +1.3176 +1.2952
Dollar/Canadian CAD=D3 1.3130 1.3129 +0.01% +1.07% +1.3139 +1.3081
Aussie/Dollar AUD=D3 0.7126 0.7048 +1.11% +1.56% +0.7136 +0.7047
Euro/Swiss EURCHF= 1.0730 1.0722 +0.07% -1.12% +1.0740 +1.0712
Euro/Sterling EURGBP= 0.9010 0.9133 -1.35% +6.58% +0.9140 +0.9012
NZ NZD=D3 0.6665 0.6580 +1.32% -0.92% +0.6677 +0.6577
Dollar/Dollar
Dollar/Norway NOK=D3 9.1995 9.2715 -0.76% +4.89% +9.3015 +9.1835
Euro/Norway EURNOK= 10.9145 10.9780 -0.58% +10.94% +10.9960 +10.9028
Dollar/Sweden SEK= 8.7276 8.7417 +0.11% -6.63% +8.7536 +8.7030
Euro/Sweden EURSEK= 10.3530 10.3421 +0.11% -1.11% +10.3740 +10.3217