The struggle continues in the U.S. Congress on extending COVID-19 stimulus package while investors cheered an order from the U.S. President Donald Trump.
The order restores some enhanced unemployment payments and suspends payroll taxes, despite doubts over its legality.
Congressional leaders and Trump administration officials said on Monday they were ready to resume negotiations on a coronavirus aid deal. It was unclear whether they could bridge their differences. Also, upbeat comments by U.S. Treasury Secretary Steven Mnuchin on the prospects for a bipartisan stimulus deal supported markets.
Also, there is calm on the Sino-U.S. diplomatic front before a crucial round of trade talks. There are hopes Beijing’s sanctions on 11 U.S. citizens may end this round of tit-for-tat moves between the two powers. China imposed sanctions on 11 U.S. citizens, including Republican lawmakers, following Washington’s sanctions on Hong Kong and Chinese officials.
U.S. and Chinese officials hold talks on Saturday to review the first six months of the Phase 1 trade deal. Markets seem confident trade ties will be insulated from the diplomatic noise.
However, the mood is watchful as economic data such as a rise in UK jobless rates remains a cause for concern. The number of people in work in Britain has suffered the biggest drop since 2009. Signs are growing that the coronavirus will take a heavier toll on the labour market.
Experts expect mounting job losses as Britain winds down its job-retention scheme. The scheme has covered around one in three private-sector jobs and is due to close at the end of October.
START TRADINGForex – U.S. Congress still argues on extending fiscal stimulus
Market optimism kept safe-haven assets under gentle pressure. Risk-sensitive currencies firmed. Market response to the U.S.-China conflict has been limited.
The U.S. dollar maintained its gains as a stalemate in the U.S. Congress over fiscal stimulus supported safe-haven assets. Euro/dollar was last up 0.4% at $1.1782, after earlier falling to $1.1722, its weakest since Aug. 4. Before that, the dollar had declined for seven straight weeks.
The dollar index fell nearly 0.5% towards more than two-year lows. Concerns the U.S. economy will underperform its rivals due to its struggles to contain the coronavirus pandemic are growing.
The dollar was last up 0.1% against the Japanese yen at 106.09.
The Canadian dollar rose 0.5% to $1.3284.
The euro firmed 0.5% against the dollar after a German investor sentiment survey showed more improvement than expected. However, there have been some signs of late the euro’s 10% rally since March may lose steam.
The pound was up 0.2% at $1.3095. Sterling surged after BoE Deputy Governor said that the central bank will step up quantitative easing if the British economy struggles again. The British pound climbed towards five-month highs, benefiting from broad-based dollar weakness too.
Versus the euro, it drifted to a one-month high of 90.04 pence.
Gold fell under $2000 an ounce, down more than 2%.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money