By John McCrank
NEW YORK, Oct 20 (Reuters) - The U.S. dollar dipped on
Tuesday, hitting a one-month low against a basket of major
currencies, as investors awaited the outcome of fiscal stimulus
talks ahead of the upcoming U.S. presidential election and
coronavirus cases spiked in Europe.
The dollar index =USD declined for a second day, with the
safe-haven currency hitting 92.991, its lowest since Sept. 21,
as House Speaker Nancy Pelosi she was optimistic Democrats could
reach a deal with the Trump administration on additional
COVID-19 relief that could get aid out by early next month.
The euro EUR=EBS , last up 0.49%, hit a one-month high of
$1.184 versus the greenback, after having weakened 0.1% to
$1.17600 in early London trading.
"You have to think about U.S. dollar weakness as a possible
longer-lasting fixture," said Yousef Abbasi, global market
strategist at StoneX.
While fiscal stimulus talks have been at an impasse,
investors are looking beyond the Nov. 3 elections, he said.
"The most optimistic stimulus story is the ‘blue wave'
stimulus story: Biden gets the White House, the Senate turns
Democrat, and boom, we unlock $4 trillion to $5 trillion in
spending in 2021, related to stimulus, some of the Biden
initiatives on infrastructure, green energy and things like
that," he said.
While markets are confident a win by Biden would lead to
more fiscal stimulus, investors are also wary of a potentially
contested election result that might boost the greenback's
safe-haven appeal.
"As we approach U.S. elections and with COVID infections
around the globe rising at a fast pace, investors may refrain
from engaging into large trading positions," said Charalambos
Pissouros, a senior market analyst at JFD Group.
France reported a massive jump in people hospitalized and
Ireland announced some of Europe's toughest restrictions.
Still, markets have stayed within recent ranges with foreign
exchange volumes dropping amid rising uncertainty in both the
United States and Europe.
"Currency markets are in wait-and-watch mode with traders
unwilling to take big bets before such a major event risk," said
Lee Hardman, currency strategist at MUFG in London.
Sterling dipped 0.07% to 1.2941 GBP=D4 .
Britain's chief Brexit negotiator David Frost said there was
no basis to resume trade talks with the European Union unless
there was a fundamental change in Brussels' approach.
The pound's resilience to negative news flows pointed to
optimism that a deal will eventually go through, said Stephen
Innes, chief global market strategist at Axi.
"Let's hope constructive progress endures. It feels like we
are playing a pinball machine, getting bounced around but not
going anywhere these days," he said.
On the data front, U.S. single-family homebuilding surged to
a more than 13-year high in September amid record-low mortgage
rates and a migration to the suburbs and low-density areas in
search of more room for home offices and schooling. "These data suggest construction is blazing a trail as the
economy normalizes amid the COVID-19 crisis," ANZ Research said
in a note to clients.
Elsewhere, the safe-haven yen JPY=D3 edged up 0.05%
against the dollar to 105.4650.
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Currency bid prices at 2:57PM (1857 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.1827 $1.1770 +0.49% +5.50% +1.1841 +1.1760
Dollar/Yen JPY=D3 105.4650 105.4150 +0.05% -2.90% +105.7400 +105.4700
Euro/Yen EURJPY= 124.74 124.07 +0.54% +2.29% +124.9900 +124.0500
Dollar/Swiss CHF=EBS 0.9069 0.9100 -0.35% -6.28% +0.9110 +0.9056
Sterling/Dollar GBP=D3 1.2941 1.2949 -0.07% -2.44% +1.2979 +1.2911
Dollar/Canadian CAD=D3 1.3118 1.3189 -0.54% +0.98% +1.3204 +1.3105
Aussie/Dollar AUD=D3 0.7066 0.7068 -0.03% +0.71% +0.7072 +0.7021
Euro/Swiss EURCHF= 1.0726 1.0710 +0.15% -1.16% +1.0733 +1.0705
Euro/Sterling EURGBP= 0.9138 0.9086 +0.57% +8.09% +0.9148 +0.9081
NZ NZD=D3 0.6591 0.6606 -0.21% -2.04% +0.6606 +0.6555
Dollar/Dollar
Dollar/Norway NOK=D3 9.2620 9.3045 -0.59% +5.45% +9.3490 +9.2500
Euro/Norway EURNOK= 10.9540 10.9750 -0.19% +11.34% +11.0084 +10.9430
Dollar/Sweden SEK= 8.7409 8.8231 -0.52% -6.49% +8.8399 +8.7377
Euro/Sweden EURSEK= 10.3380 10.3917 -0.52% -1.25% +10.3986 +10.3384