U.S. President Trump boosted hopes for a large fiscal stimulus package while greenback hits its lowest since September in response to the comments.
Lawmakers in Washington have been negotiating intermittently since August. Democrats have been arguing for a bigger package to help manage the economic fallout from coronavirus.
Trump raised hopes for a breakthrough on Tuesday. The US President said he was willing to accept a large aid bill, despite opposition from his own Republican party.
House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin will resume stimulus talks today. Though last evening’s self-imposed deadline has come and gone. But investors were nervous over whether any such package would pass the Republican-controlled Senate.
Further, investors are broadly in consolidation mode before the November 3. U.S. presidential election.
Markets are confident a win by Democrat Joe Biden would lead to more fiscal stimulus, potentially weakening the dollar. But investors are also wary of a contested election result that might boost the safe-haven appeal of the greenback.
Hopes for a pre-election stimulus package led traders to buy riskier currencies, amid the doubts any package could pass the Senate.
START TRADINGForex – Greenback hits its lowest in more than six weeks
Markets generally expect more fiscal stimulus to be passed in the near future regardless of whether it is agreed before the election.
The dollar extended its losses on Wednesday. The dollar index was down 0.3% at 92.733, having hit a low of 92.685 earlier in the session.
The safe-haven Japanese yen was up around 0.5% against the dollar, close to one-month highs, at 104.845.
The riskier New Zealand and Australian dollars both advanced, with the Kiwi up 0.8% and the Aussie up 0.6% versus the dollar by 1107 GMT.
Yuan’s rise helped lift the Aussie, weighed down by expectations of a rate cut in November, from Tuesday’s three-week low.
The Canadian dollar rose to its strongest in more than six weeks, touching 1.3081 per dollar
The euro rose to a one-month high versus the dollar in early trading and was up 0.3% at $1.18575 at 1108 GMT.
Elsewhere, Sterling jumped to as high as $1.3071 after the EU’s chief negotiator said that a Brexit deal was “within reach”. The pound rose 0.9% to $1.3066, its highest since Oct. 13.
The British currency rose 0.6% against the euro, to 90.80 pence.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money