The dollar stabilised on rising optimism that U.S. lawmakers could agree on new stimulus to blunt the economic impact of the coronavirus.
U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin continued their recent flurry of activity working towards a deal. White House Chief of Staff said there was still potential for an agreement among lawmakers in Washington. He added that Trump was committed to getting the deal done.
However, renewed efforts to reach an agreement have been complicated by the spread of the coronavirus among key policymakers.
Investors looked for signs that Washington was close to agreeing on more fiscal stimulus. Gold, bonds and the dollar all dipped amid the modestly improved risk appetite.
Risk appetite also improved after U.S. President Donald Trump left the hospital and returned to the White House following COVID-19 treatment. This development viewed as reducing political uncertainties in the near term.
The Reserve Bank of Australia kept interest rates on hold at 0.25%, despite widespread expectations of a rate cut. Australia will spend A$4 billion over the next year to pay businesses that hire those under the age of 35.
A second wave of the pandemic risks delaying the euro zone’s economic recovery, European Central Bank President Christine Lagarde said.
START TRADINGForex – Rising optimism on U.S stimulus deal boosts risk appetite
All eyes later in the day will be on an address by Federal Reserve Chair Jerome Powell at a virtual meeting. caution from European Central Bank President Christine Lagarde was already setting the tone.
The dollar index was last flat at 93.49. It has fallen around 1% from a two-month high reached at the end of September. Euro/dollar was also flat at 1.1779.
The dollar was 0.2% weaker versus the Japanese yen at 105.56.
The Australian dollar reversed the gains it made after the RBA rates decision. The Aussie was last trading at 0.7150, down 0.4% on the day.
Sterling climbed above $1.30 on Tuesday for the first time in three weeks. Investors pushed back expectations for when the Bank of England would cut interest rates below zero.
The pound was flat against the euro, last trading down 0.1% at 90.83 pence.
Also supporting sentiment was cautious optimism towards Britain’s trade talks with the European Union. Most analysts now expect London and Brussels to reach a deal before the transition deadline.
Oil jumped more than 5% overnight and edged higher still in Europe, supported by the Trump news. Brent crude climbed 1.7% at $42.03 a barrel while U.S. crude last stood at $39.85 a barrel, up 1.6%.
Gold recovered from an overnight wobble to perch at $1,917 per ounce, after hitting a two-week peak on Monday.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money