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FOREX-Dollar dips as risk sentiment lifted by stimulus hopes

Mon, 5th Oct 2020 20:05

* Graphic: World FX rates in 2020

(Updates prices, adds commentary)
By Karen Brettell and John McCrank
NEW YORK, Oct 5 (Reuters) - The safe-haven U.S. dollar dipped on Monday and riskier currencies
outperformed on optimism that U.S. lawmakers will agree on new stimulus to blunt the economic impact of
the coronavirus, while investors awaited updates on the severity of President Donald Trump's COVID-19
Stocks rallied on Monday on the stimulus hopes and as Trump said he would be discharged from the
hospital where he in his fourth day of treatment for the virus.
"I think the market is convinced that sooner or later fiscal stimulus will materialize in the wake of
data that continues to show a moderating U.S. economy," said Joe Manimbo, senior market analyst, at
Western Union Business Solutions in Washington.
The optimism was supported by White House Chief of Staff Mark Meadows, who said there is still
potential for a deal among lawmakers in Washington on more economic relief, and that Trump is committed to
getting the deal done.
Failure to reach a deal, however, would likely be positive for the dollar, which on Monday fell 0.32%
against a basket of major currencies.
"We think that the prospects for stimulus before the election are still very low," said Erik Nelson, a
macro strategist at Wells Fargo in New York. "We’re of the view that we should fade this dollar weakness
we're seeing today, and in particular against some of these higher risk currencies like the Norwegian
krone or the Australian dollar."
The euro gained 0.50% to $1.1774, the highest since Sept. 21.
The Australian dollar rose 0.17% to $0.7174 and the greenback dipped 0.72% to 9.2327 krone
Trump's COVID-19 diagnosis adds another layer of uncertainty to the U.S. Nov. 3 presidential election,
and what it could mean for the greenback.
"There isn't a clear consensus on how the dollar should trade on this degree of political uncertainty
in the U.S.," said Jane Foley, senior FX strategist at Rabobank.
Trump said he will leave the U.S. military hospital where he was being treated for COVID-19 later on
Monday, adding that he felt "really good."
The U.S. Federal Reserve will release minutes from its September meeting on Wednesday and the European
Central Bank will release its latest meeting minutes on Thursday.
Sterling gained 0.35% to $1.2976.
British Prime Minister Boris Johnson and the head of the EU's executive, Ursula von der Leyen, agreed
in a phone call on Saturday to step up Brexit talks to close "significant gaps" barring a new trade
Currency bid prices at 2:34PM (1834 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Euro/Dollar EUR= $1.1774 $1.1716 +0.50% +5.03% +1.1797 +1.1708
Dollar/Yen JPY= 105.7100 105.3300 +0.36% -2.89% +105.7900 +105.3000
Euro/Yen EURJPY= 124.45 123.39 +0.86% +2.05% +124.7000 +123.3700
Dollar/Swiss CHF= 0.9159 0.9209 -0.54% -5.36% +0.9207 +0.9145
Sterling/Dollar GBP= 1.2976 1.2931 +0.35% -2.13% +1.2990 +1.2901
Dollar/Canadian CAD= 1.3278 1.3307 -0.22% +2.25% +1.3303 +1.3257
Australian/Doll AUD= 0.7174 0.7162 +0.17% +2.18% +0.7193 +0.7157
Euro/Swiss EURCHF= 1.0784 1.0781 +0.03% -0.63% +1.0792 +1.0736
Euro/Sterling EURGBP= 0.9073 0.9053 +0.22% +7.32% +0.9091 +0.9053
NZ NZD= 0.6632 0.6635 -0.05% -1.54% +0.6654 +0.6631
Dollar/Norway NOK= 9.2327 9.3000 -0.72% +5.18% +9.3359 +9.1982
Euro/Norway EURNOK= 10.8720 10.9200 -0.44% +10.51% +10.9392 +10.8470
Dollar/Sweden SEK= 8.9050 8.9396 +0.24% -4.73% +8.9397 +8.8802
Euro/Sweden EURSEK= 10.4848 10.4600 +0.24% +0.15% +10.4935 +10.4470

(Reporting By Karen Brettell; Editing by David Gregorio)

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