Dollar Down On Democratic Lead, Stimulus Hopes
09 October 2020 - 7:55PM
RTTF2
The U.S. dollar depreciated against its most major counterparts
in the European session on Friday, as a jump in Democratic
presidential candidate Joe Biden's lead over President Donald Trump
in several polls and renewed hopes for a U.S. stimulus deal boosted
investor sentiment.
Reuters/Ipsos opinion polls showed Biden ahead by 10 percentage
points over Trump.
Growing hopes for a Democratic victory in the November election
and the prospect of significant further stimulus reduced the demand
for the safe-haven currency.
The Trump administration indicated on Thursday night that it was
open to a broader coronavirus stimulus package - one that includes
support for airlines, state and local government aid, and jobless
benefits.
U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven
Mnuchin resumed their talks over the coronavirus aid plan, after
Trump abruptly called off negotiations earlier this week.
Better-than-expected China services PMI also aided
sentiment.
The Caixin composite services Purchasing Managers' Index for
China rose to 54.8 in September from 54.0 in August, marking the
fifth consecutive increase in service sector output. The expansion
was underpinned by a sustained rise in total new business.
The greenback eased back to 105.83 against the yen, on track to
pierce a 2-day low of 105.81 seen in the Asian session. The dollar
is seen finding support around the 104.00 mark.
The greenback fell to 0.9122 against the franc, which was its
weakest level since September 21. Next key support for the
greenback is likely seen around the 0.90 level.
The greenback declined to more than a 2-week low of 1.1809
against the euro, versus Thursday's closing quote of 1.1758. The
greenback is likely to face support around the 1.20 region, if it
drops again.
Reversing from its early highs of 1.3196 against the loonie,
0.7167 against the aussie and 0.6575 against the kiwi, the
greenback dropped to a 3-week low of 1.3160, 3-day lows of 0.7195
and 0.6623, respectively. The next possible support for the
greenback is seen around 1.29 against the loonie, 0.75 against the
aussie and 0.68 against the kiwi.
In contrast, the greenback rebounded from a 3-day low of 1.2973
against the pound and was trading at 1.2922. If the dollar
strengthens further, 1.28 is seen as its next resistance level.
Data from the Office for National Statistics showed that the UK
economy grew at a moderate pace in August as lockdown measures
continued to ease.
Gross domestic product climbed 2.1 percent on month, slower than
the 6.4 percent expansion seen in July.
U.S. wholesale inventories for August will be released in the
New York session.
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