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FOREX-Dollar rally loses steam as investors eye stimulus talks in Washington
Published at 04/08/2020 at 16:15

* Graphic: World FX rates in 2020

(Updates prices, comments, changes byline, dateline, previous LONDON)

By Caroline Valetkevitch

NEW YORK, Aug 4 (Reuters) - The U.S. dollar was little changed against a basket of currencies on Tuesday, as recent gains driven by dollar bears taking profits ran out of steam and investors looked to Washington for direction as talks on the next round of coronavirus relief aid continued.

After its worst month in a decade in July, the greenback started August on a firm note as some investors trimmed their short positions.

But the immediate outlook for the dollar remains tied partly to relief aid talks in Washington and the economic impact of new virus cases in the United States.

The White House and Democratic congressional leaders have reported some progress in recent days in discussions over a fifth major coronavirus aid bill to help the economy, but they remain apart on a range of issues.

Expectations that the U.S. economy's recovery would lag its peers have weighed on the dollar.

"While a consolidation or a modest corrective rebound was inevitable after the sharp fall last month, market sentiment towards the dollar remains negative due to dominating concerns about the scale of the coronavirus pandemic in the U.S. and its devastating impact on the economy," Piotr Matys, senior emerging markets FX Strategist at Rabobank, said in a note.

There are still a lot of questions over the U.S. economy's recovery, and the next big data points will be weekly jobless claims and the July U.S. employment report this week, said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York.

But giving some support to the dollar for now is "a little bit of profit-taking. The dollar is so grossly oversold. ... You had this enormous amount of one-way price action," he said.

The dollar index, which measures the currency against a basket of currencies, was about flat at 93.539.

The euro - which gained 5% at the dollar's expense in July - was last down 0.04% at $1.1756.

The Aussie dollar was up 0.31% after the Australian central bank held policy steady, as expected.

Australia's central bank predicted that the economic recovery would be uneven. The country's second biggest state, Victoria, is under lockdown to fight a resurgence of the virus.

Despite a slowdown in new U.S. virus cases and encouraging factory data, investors are reserving judgement on whether a U.S. economy with 30 million people out of work can really lead the world's recovery.

Top White House officials and Democratic leaders in the U.S. Congress were due to try again on Tuesday to narrow gaping differences over a fifth major coronavirus-aid bill to help the economy. Days of closed-door negotiations have so far yielded few results, participants say.

========================================================

Currency bid prices at 10:55AM (1455 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar EUR= $1.1756 $1.1761 -0.04% +4.87% +1.1806 +1.1722

Dollar/Yen JPY= 105.8300 105.9400 -0.10% -2.77% +106.1900 +105.7400

Euro/Yen EURJPY= 124.44 124.61 -0.14% +2.03% +125.0100 +124.2700

Dollar/Swiss CHF= 0.9159 0.9177 -0.20% -5.36% +0.9191 +0.9143

Sterling/Dollar GBP= 1.3046 1.3072 -0.20% -1.61% +1.3107 +1.2982

Dollar/Canadian CAD= 1.3368 1.3389 -0.16% +2.93% +1.3420 +1.3360

Australian/Doll AUD= 0.7145 0.7123 +0.31% +1.75% +0.7153 +0.7106

ar

Euro/Swiss EURCHF= 1.0769 1.0793 -0.22% -0.76% +1.0810 +1.0740

Euro/Sterling EURGBP= 0.9009 0.8994 +0.17% +6.56% +0.9040 +0.8991

NZ NZD= 0.6608 0.6610 -0.03% -1.90% +0.6624 +0.6590

Dollar/Dollar

Dollar/Norway NOK= 9.1180 9.1306 -0.14% +3.85% +9.1671 +9.0887

Euro/Norway EURNOK= 10.7206 10.7410 -0.19% +8.97% +10.7700 +10.7128

Dollar/Sweden SEK= 8.7507 8.7394 +0.01% -6.38% +8.7850 +8.7184

Euro/Sweden EURSEK= 10.2880 10.2867 +0.01% -1.72% +10.3044 +10.2744

(Reporting by Caroline Valetkevitch; additional reporting by Iain Withers in London and Tom Westbrook in Singapore; editing by Barbara Lewis, Gareth Jones and Jonathan Oatis)

((caroline.valetkevitch@thomsonreuters.com; +1 646 223 6393; Reuters Messaging: caroline.valetkevitch.thomsonreuters.com@reuters.net))