Dollar Down Despite Uncertainty Remaining Over Stimulus Package

© Reuters.
© Reuters.

By Gina Lee – The dollar was down on Friday morning in Asia, after earlier gains were reversed over lingering doubts about the latest U.S. stimulus package. Meanwhile, the Chinese yuan was boosted by the inclusion of Chinese debt to Russell’s World Government Bond (WGBI) index.

The that tracks the greenback against a basket of other currencies inched down 0.03% to 94.365 by 9:52 PM ET (1:52 AM GMT).

U.S. markets rose on Thursday over increased hopes that the U.S. Congress would break a months-long impasse to pass the latest COVID-19 stimulus measures. Democrats in the U.S. House of Representatives announced that they are working on a $2.2 trillion COVID-19 stimulus package that could be voted on next week. There is also a suggestion that House of Representatives Speaker Nancy Pelosi and U.S. Treasury Secretary Steven Mnuchin could resume stalled stimulus talks.

But some investors remained skeptical on whether Congress will overcome the impasse. U.S. President Donald Trump refused to commit to a peaceful transfer of power should he fail to be re-elected in November’s presidential elections, increasing the chances of a disputed election.

Meanwhile, data released on Thursday showed that the number of Americans claiming unemployment over the past week , indicating a slowdown in the economic recovery and highlighting the pressing need for Congress to pass the support measures.

“We have seen lately the dollar gaining as risk assets are sold off. We need to see whether this will continue beyond the end of this month,” Daiwa Securities senior strategist Yukio Ishizuki told Reuters.

The pair inched up 0.07% to 105.47.

The pair was down 0.22% to 6.8123. The reversed its decline over the past week after FTSE Russell’s announcement that Chinese government bonds will be added to the WGBI index starting in 2021.

“Foreign ownership of Chinese government bonds has picked up steadily. The inclusion in the WGBI benchmark will prompt additional foreign flows into the Chinese bond market and support the yuan,” Commonwealth Bank China economist Kevin Xie told Reuters.

The pair edged up 0.14% to 0.7055 and the pair inched up 0.02% to 0.6551.

The pair inched up 0.04% to 1.2754. The pound was supported by U.K. Chancellor of the Exchequer Rishi Sunak’s ‘winter plan’ proving limited support for workers as the country continues to battle against a second wave of COVID-19.

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