NVDA Q3 Earnings Alert: Why our AI stock picker is still holding Nvidia stockRead More

FOREX-Stimulus hopes press dollar to one-month low; yuan soars

Published 21/10/2020, 04:19
© Reuters.
EUR/USD
-
USD/JPY
-
AUD/USD
-
USD/SGD
-
USD/THB
-
USD/KRW
-
USD/CNY
-
USD/IDR
-
DX
-
US10YT=X
-

* Euro hits one-month peak, dollar index at one-month low
* Yuan soars to 27-month high as economic rebound drives
flows
* AUD, NZD creep higher as stimulus hopes and yuan gains
support
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Tom Westbrook
SINGAPORE, Oct 21 (Reuters) - The dollar hit a one-month low
on Wednesday as investors who are optimistic about a
pre-election U.S. stimulus package sought out riskier
currencies, while the strong recovery in China's economy helped
drive the yuan to a two-year high.
President Donald Trump has raised hopes for a stimulus
breakthrough, saying he was willing to accept a large aid bill,
despite opposition from his own Republican Party. That sent U.S. 10-year Treasury yields US10YT=RR to a
four-month high, in anticipation of more government borrowing,
and pressed the dollar index =USD to its lowest level since
September by boosting investors' mood. US/
Doubts that any package can actually pass the Senate are
keeping the dollar from breaching last month's two-year lows.
The dollar index was last down about 0.1% in Asia.
The Australian and New Zealand dollars, which have lagged
other majors' gains on the greenback due to expectations of
monetary easing in both countries, each rose about 0.4%. AUD/
The euro EUR= hit a one-month high of $1.1844.
"U.S. stimulus faith remains in play," said Sook Mei Leong,
ASEAN head of global markets research at MUFG in Singapore.
"This is notwithstanding that euro/dollar remains vulnerable
to the stream of ... increases in COVID-19 cases and crimped
economic activities from the re-introduction of lockdowns."
Such worries and the drawn-out and oscillating fortunes of
the U.S. stimulus bill have held the dollar in its range this
month and will determine its next moves.
The Japanese yen JPY= has likewise been held in stasis as
the brightening mood weakens the greenback, but the simultaneous
rise in U.S. yields attracts investment flows from Japan out of
yen and in to dollars. The yen edged up 0.1% on Wednesday.
"All eyes are on whether a U.S. stimulus bill is agreed
upon," Kim Mundy, currency analyst at the Commonwealth Bank of
Australia in Sydney, said in a note.
"Without a more aggressive U.S. fiscal thrust, the U.S.
economic recovery is at risk and the dollar is vulnerable to a
renewed bout of strength in the short-term."

YUAN SHOW IN TOWN
In contrast to the dollar's dependence on stimulus hopes,
the yuan extended a remarkable rally on Wednesday, hitting a
27-month high and pulling China-exposed Asian currencies with
it. CNY/ EMRG/FRX
The yuan has soared 7.6% on the dollar since May as China
has led the global coronavirus recovery and its stock and bond
markets have soaked up offshore capital flows.
A firm onshore guidance rate fixing on Wednesday assuaged
worries that policymakers are concerned about its rise.
"China is the strongest economic story in town, relative to
Europe and the U.S.," said Bank of Singapore currency analyst
Moh Siong Sim. A Joe Biden presidency, he added, could also
provide support by calming Sino-U.S. relations.
Data on Monday showed China's economic growth accelerating
as the pandemic recedes, and a state planning official on
Wednesday said auto sales and production could hit last year's
levels. The yuan CNY= was last up 0.2% at 6.6532. Its rise helped
lift the Australian dollar AUD= , weighed down by expectations
of a rate cut in November, from Tuesday's three-week low.
The South Korean won KRW= , Singapore dollar SGD= and
Thai baht THB= also rallied. The Indonesian rupiah IDR= hit
a two-week high after solid demand in a Tuesday debt auction.
Later on Wednesday, preliminary Australian retail sales
figures are due. At 0730 GMT, European Central Bank President
Christine Lagarde and chief economist Philip Lane host a broad
strategy review event in Frankfurt.
The U.S. Federal Reserve releases its "Beige Book" economic
survey at 1800 GMT.

========================================================
Currency bid prices at 11:02AM (302 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.1839 $1.1821 +0.16% +5.61% +1.1844 +1.1823
Dollar/Yen JPY=D3 105.3700 105.4700 -0.09% -2.98% +105.5200 +105.3700
Euro/Yen EURJPY= 124.76 124.71 +0.04% +2.30% +124.8300 +124.6700
Dollar/Swiss CHF=EBS 0.9058 0.9071 -0.14% -6.39% +0.9070 +0.9058
Sterling/Dollar GBP=D3 1.2970 1.2947 +0.13% -2.25% +1.2973 +1.2952
Dollar/Canadian CAD=D3 1.3102 1.3129 -0.22% +0.84% +1.3128 +1.3100
Aussie/Dollar AUD=D3 0.7073 0.7048 +0.39% +0.84% +0.7078 +0.7047
NZ NZD=D3 0.6606 0.6580 +0.38% -1.84% +0.6609 +0.6577
Dollar/Dollar


All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2024 - Fusion Media Limited. All Rights Reserved.