Forex Today: US dollar sags amid fiscal overhang, mounting coronavirus risks
|Here is what you need to know on Monday, September 21:
The US dollar remained on the defensive starting out a fresh week this Monday, extending last week’s softness, courtesy of the gridlock on the US fiscal stimulus. The US lawmakers are still nowhere near agreeing on new relief aid, which could likely thwart the nascent economic recovery.
The greenback failed to benefit from the risk-off market mood amid renewed US-China tensions. Trump administration ordered to ban WeChat and TikTok applications from the states, although the curbs were put on hold by a judge. Meanwhile, US President Donald Trump approved Oracle Corp.’s bid for the American operations of TikTok “in concept.”
Asian equities tracked Wall Street lower, with Japanese markets closed on a public holiday. Investors weighed in China ratcheting up the risk of military confrontation in the Taiwan Strait, as Sino-American row over Taipei escalates.
AUD/USD was the top gainer in Asia and retook 0.7300, helped by the upbeat comments from Australian Prime Minister (PM) Scott Morrison. He predicts a job bounce-back as Victoria prepares to reopen. The kiwi also followed suit and headed back towards 0.6800 after NZ PM Jacinda Ardern lowered the country-wide alert outside Auckland to level 1. The yen advanced on broad risk-aversion against the US dollar, with USD/JPY downed to near two-month lows of 104.26.
EUR/USD jumped back onto 1.1850, with the 1.1900 level back in sight, as the common currency shrugged-off concerns over the coronavirus resurgence in Europe. Fresh restrictions were imposed in Greece and Denmark last Friday. Spain and France mulled local lockdowns amid a spike in infections. Among other news, the European Central Bank (ECB) launched a review of its Pandemic Emergency Purchase Programme (PEPP), as cited by the Financial Times (FT).
GBP/USD stood resilient above 1.2950, despite the increasing odds of a nationwide lockdown in the UK. British Health Minister Matt Hancock said that the country is at a “tipping point.” UK Chancellor Rishi Sunak may extend business support loans. Optimism over a Brexit deal, courtesy of European Commission President Ursula von der Leyen’s upbeat comments, continued to bode well for the pound.
Gold traded on the front foot above $1950 amid the dollar weakness, ahead of the Fed Chairman Jerome Powell’s speech. Oil prices returned to the red despite the US storm-led production halt. WTI posted small losses to test the $41 mark.
Cryptocurrencies’ traded modestly flat, with Bitcoin probing the $11K level.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.