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FOREX-Dollar on backfoot as hopes fade for U.S. stimulus deal

Published 13/08/2020, 01:14
Updated 13/08/2020, 01:18
© Reuters.

© Reuters.

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Talks on U.S. stimulus not progressing
* U.S. dollar loses some ground
* Aussie in focus as jobs data looms

By Stanley White
TOKYO, Aug 13 (Reuters) - The dollar nursed losses against
most of its peers on Thursday amid fading hopes for a compromise
between Republicans and Democrats over additional economic
stimulus.
In Asia, the focus was on the Australian dollar ahead of
data that is expected to show slowing jobs creation and rising
unemployment as a resurgence of the coronavirus rocks the
economy.
The greenback was hampered by a decline in Treasury yields,
but analysts say this is likely only a temporary setback because
U.S. lawmakers will eventually agree to more stimulus to support
economic recovery from the coronavirus.
"The dollar needs positive news on stimulus to rise further,
but I'm sure we'll get there, because these politicians can't go
back to their constituencies empty handed," said Masafumi
Yamamoto, chief currency strategist at Mizuho Securities in
Tokyo.
"Once this happens, gains in dollar/yen could be a catalyst
for dollar gains against other currencies."
Against the euro EUR=D3 , the dollar traded at $1.1786
following a 0.4% decline on Wednesday.
The British pound GBP=D3 held steady at $1.3034.
The dollar was quoted at 0.9122 Swiss franc CHF=D3 after
falling around half a percent against the safe harbour currency
during the previous session.
The dollar fared slightly better against the yen, trading
at 106.87, near a three-week high.
President Donald Trump accused congressional Democrats on
Wednesday of not wanting to negotiate over a U.S. coronavirus
aid package as top Republican and Democratic negotiators traded
blame for a five-day lapse in talks over relief legislation.
The pandemic has taken a particularly heavy toll on the
United States, where it has killed more people than any other
country. Millions of U.S. workers have lost jobs, and
supplemental federal unemployment benefits expired last month.
Market sentiment has swung between optimism and pessimism,
but analysts argue that more stimulus is the most likely outcome
because without it the U.S. economic recovery could stall.
The U.S. dollar index against a basket of major currencies
USD= fell 0.3% on Wednesday but is still well above the
two-year low it reached last week.
Elsewhere in currencies, the Australian dollar AUD=D3 was
little changed at $0.7165 as traders braced for the
closely-watched jobs report for July.
A resurgence of coronavirus cases in Melbourne has rattled
confidence in Australia's economy.
Across the Tasman Sea, the New Zealand dollar NZD=D3
bought $0.6577, stabilising after the country's central bank
expanded quantitative easing and flagged the prospect of
negative interest rates.

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