Dollar falls as risk sentiment returns on stimulus package hopes

The greenback dropped against majority of its peers on Monday, except for safe-haven Japanese yen as global stocks rallied due to return of risk appetite on renewed optimism that U.S. lawmakers will reach a deal on the coronavirus aid package after comments from U.S. House speaker Nancy Pelosi over the weekend together with optimism that U.S. President Donald Trump would be discharged from the hospital soon. (Dow ended the day at 28,148, up by 465 points or 1.68%)  
  
Reuters reported U.S. House Speaker Nancy Pelosi on Sunday said progress was being made on coronavirus relief legislation to respond to the economic fallout from a pandemic that has killed more than 207,000 Americans and thrown millions out of work.  
"We're making progress," Pelosi told CBS. Pelosi, a Democrat, and Treasury Secretary Steven Mnuchin talked every day last week and met in person on Wednesday in an effort to negotiate a new bipartisan aid package.    The president was improving, although doctors were monitoring the condition of his lungs after he received supplemental oxygen. They said he could be sent back to the White House as soon as Monday.  
  
On the data front, Reuters reported the Institute for Supply Management (ISM) said on Monday its non-manufacturing activity index rose to a reading of 57.8 last month from 56.9 in August. That put the index just above its 57.3 level in February.  
  
Versus the Japanese yen, although price briefly dropped to 105.29 in New Zealand, price gained to 105.60 in Asian morning on weekend comments from Pelosi together with optimism that President Trump may be discharged from hospital soon. The pair continued to trade with a firm undertone and rose to session highs at 105.79 in New York due to rally in U.S. stocks and Treasury yields before stabilising.  
  
The single currency found renewed buying at 1.1707 in New Zealand and gained to 1.1735 in Asian morning before retreating to 1.1720 in early European morning. However, the pair then rallied to a 13-day high of 1.1797 in New York morning due to return of risk sentiment before weakening to 1.1772 on profit-taking.  
  
The British pound went through a volatile session. Price retreated to 1.2917 in New Zealand before rebounding to 1.2954 in Asia on return of risk sentiment but only to fall to session lows at 1.2900 in early European morning on cross-selling in sterling. However, cable then erased its losses and rallied in tandem with euro to a 2-week high at 1.2991 in New York morning on usd's weakness before retreating to 1.2965 on profit-taking and then swung sideways.  
  
In other news, Reuters reported the COVID-19 pandemic has made sealing a post-Brexit trade relationship with Britain more urgent than before and failing to get a deal would be irresponsible, Germany's Foreign Minister Heiko Maas said on Monday.    Speaking after a meeting European Union's chief Brexit negotiator Michel Barnier, Maas said the EU wanted to be constructive and was still aiming for a deal.  
  
Data to be released on Tuesday :  
  
New Zealand NZIER confidence, GDT price index, Australia AIG construction index, ANZ job advertisements, trade balance, imports, exports, RBA interest rate decision, UK BRC retail sales, Markit construction PMI, China market holiday, Germany industrial orders, U.S. trade balance, redbook, JOLTS job openings, and Canada trade balance, exports, imports.