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FOREX-Dollar eases off 7-week low as COVID-19 aid bill in doubt
Published at 22/10/2020 at 20:07

By John McCrank

NEW YORK, Oct 22 (Reuters) - The dollar index ticked higher on Thursday, easing off a seven-week low as hopes for a coronavirus aid package ahead of the U.S. elections faded and COVID-19 cases surged around the world, giving a slight bid to safe-haven assets like the greenback.

Investors were also digesting new U.S. jobless claims data that showed a bigger-than-expected drop, but remained at extremely high levels amid fading fiscal stimulus and a resurgent coronavirus.

U.S. House of Representatives Speaker Nancy Pelosi said on Thursday negotiations toward a new relief bill were making progress and that legislation could be hammered out "pretty soon."

The talks had been thrown into doubt after Republican President Donald Trump took to Twitter late on Wednesday to accuse Democrats of being unwilling to find an acceptable compromise and amid deep opposition among Senate Republicans to a large new stimulus package.

"The market is getting a little tired of going back and forth on the stimulus talks," said Joseph Trevisani, senior analyst at FXStreet.com.

"It doesn't seem right now that either side is going to make enough concessions in view of the election, which makes sense actually, as far as their needs go, to get a deal done," he said.

The stimulus package is likely to come up when Trump faces off against Democratic rival Joe Biden later on Thursday in their final debate ahead of the Nov. 3 vote.

The dollar index was last trading at 92.932, up 0.22% and above Wednesday's bottom of 92.469, which marked the lowest level since Sept. 2, but still trading back and forth within a tight range.

"The near possibility that we're going to get more bad news or at least no good news from now to the election is driving investors out of the greenback," said Kathy Lien, managing director at BK Asset Management.

News that Europe has seen the number of coronavirus cases surge to a record high, with Spain becoming the first Western European country to exceed 1 million infections, added to the cautious tone in world markets.

The euro was down 0.35% higher versus the dollar at $1.1820, after hitting a one-month high of $1.18805 on Wednesday.

"The euro has been undeservingly strong, given the significant increases in COVID-19 cases and the fact that the ECB will have no choice but to lower interest rates," said Lien.

PMI reports from the euro zone due out on Friday could trigger a more aggressive move down in the euro, she added.

Having hit six-week highs on Wednesday amid Brexit optimism, sterling pulled back against the U.S. currency. The British pound was last down 0.47% at $1.3082 .

The Australian dollar dipped 0.01% versus the greenback to $0.7116, while the New Zealand dollar rose 0.44% to $0.6680 .

Elsewhere, the Chinese yuan retreated from a 27-month high hit a day earlier on signs the authorities have become increasingly wary over the currency's recent rapid gains.

The offshore Chinese yuan was last trading at 6.6710 per dollar. ========================================================

Currency bid prices at 2:40PM (1840 GMT)

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

Previous Change

Session

Euro/Dollar $1.1820 $1.1862 -0.35% +5.43% +1.1867 +1.1812

Dollar/Yen 104.8400 104.5700 +0.27% -3.47% +104.8800 +104.5500

Euro/Yen 123.91 124.02 -0.09% +1.61% +124.0900 +123.6700

Dollar/Swiss 0.9072 0.9053 +0.22% -6.24% +0.9080 +0.9051

Sterling/Dollar 1.3082 1.3147 -0.47% -1.34% +1.3152 +1.3071

Dollar/Canadian 1.3140 1.3144 -0.02% +1.16% +1.3177 +1.3125

Aussie/Dollar 0.7116 0.7117 -0.01% +1.42% +0.7125 +0.7085

Euro/Swiss 1.0723 1.0737 -0.13% -1.19% +1.0748 +1.0721

Euro/Sterling 0.9034 0.9018 +0.18% +6.86% +0.9046 +0.9015

NZ 0.6680 0.6655 +0.44% -0.67% +0.6688 +0.6634

Dollar/Dollar

Dollar/Norway 9.2480 9.2075 +0.44% +5.43% +9.2600 +9.2020

Euro/Norway 10.9320 10.9390 -0.06% +11.12% +10.9660 +10.8944

Dollar/Sweden 8.7707 8.7254 +0.16% -6.17% +8.7854 +8.7220

Euro/Sweden 10.3670 10.3503 +0.16% -0.98% +10.3959 +10.3485

(Reporting by John McCrank; additional reporting by additional reporting by Dhara Ranasinghe in London Editing by Nick Zieminski)

((john.mccrank@thomsonreuters.com Twitter @jmccrank; 1 646 223-6643; Reuters Messaging: john.mccrank.thomsonreuters.com@reuters.net))