A stalemate in talks between the White House and congressional Democrats over additional U.S. stimulus continued leading investors to enormous uncertainty.
The uncertainty over whether U.S. lawmakers would strike an agreement on an additional round of big fiscal stimulus is growing. The US economy is still struggling with the coronavirus pandemic. Barring a bipartisan deal, the U.S. economy could be left with measures President Trump called for through executive orders to bypass Congress.
U.S. inflation figures will probably show consumer price growth has drifted down to 1.1% on a year-on-year basis, from 1.2% in June.
Hopes of vaccine development, however, prompted some investors to reduce safe-haven assets such as gold. Russian President Vladimir Putin said on Tuesday his country was the first to grant regulatory approval to a COVID-19 vaccine. The news lifted hope some of the vaccines currently in development would become available earlier than expected.
The U.S. election campaigns look set to gather steam. Democratic presidential candidate Joe Biden selected Senator Kamala Harris as his choice for vice president.
The UK has sunk into the worst recession of any major economy. The economic output shrank by 20.4% in the second quarter of 2020, representing the largest contraction reported by any major economy so far.
START TRADINGForex – Enormous uncertainty about additional US stimulus
Many investors are closely watching debates in Washington about economic stimulus.
The U.S. dollar slipped as political wrangling over a stimulus package for the U.S. economy led to enormous uncertainty.
The dollar index, which has held above a two-year low hit last Thursday of 92.495, was down 0.2% at 93.525.
The yen, which briefly fell to the lowest in almost three weeks on Wednesday, last traded at 106.74 per dollar. The dollar made gains against the yen, with the Japanese currency down 0.3%.
The New Zealand dollar fell 0.4% to $0.6555. The country’s central bank held rates but surprised markets by extending its bond-buying programme.
The euro remained almost flat at $1.1728.
The pound was broadly flat, despite data showing the British economy had entered a deep recession. Signs of a recovery in June provided some support for the currency. Sterling last traded at $1.3020, down 0.2% but close to the five-month high of near $1.32 it reached last week. It fell 0.5% to 90.40 pence against the euro, its weakest since Friday.
The most dramatic market move took place in precious metals.
Gold fell 1.6% to $1,881.4 per ounce, a day after it suffered its biggest daily fall in seven years. Silver lost 3.2% to $23.99 per ounce, following its 15% plunge on Tuesday.
Oil prices edged up after bigger-than-expected drop in U.S. inventories. Brent was up 0.6% at $44.75 a barrel. U.S. crude was up 0.5% at $41.80.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money