[BREAKING] Stimulus Hopes Press Dollar to a One-Week Low

SINGAPORE (Reuters) - The dollar was pinned near a one-week low on Wednesday as investors optimistic about the prospects for a pre-election U.S. stimulus package sought riskier currencies.

The White House and Democrats have moved closer to agreement on a new coronavirus relief package as President Donald Trump said he was willing to accept a large aid bill despite opposition from his own Republican Party.

“I want to do it even bigger than the Democrats,” Trump said in an interview with Fox News on Tuesday. Democrat and House Speaker Nancy Pelosi, when asked whether an agreement could be reached next week, told reporters: “I hope so. That’s the plan.”

That pushed the dollar index down 0.4% to a one-week low of 92.991. It sat just above that level in Asia trade.

Stimulus is seen as a short-term weight on the dollar because the spending would support the U.S. economy and improves market sentiment, driving investors into riskier assets.

The euro led gains to hit a one-month high of $1.1841 and held at $1.1828 in Asia. U.S. bonds were sold and the safe-haven yen was also on the back foot, though it recovered from a one-week low to sit at 105.49 per dollar on Wednesday.

The usual risk-sensitive Antipodean currencies lagged broad gains on the dollar, weighed by the prospect of negative rates in New Zealand and monetary easing in Australia. Brexit worries also kept a lid on the pound.

“If U.S. policymakers manage to agree on fiscal deal, the dollar can edge lower especially against commodity sensitive currencies,” she said.

“But without a more aggressive U.S. fiscal thrust, the U.S. economic recovery is at risk and the dollar is vulnerable to a renewed bout of strength in the short-term.”

The Chinese yuan, meanwhile, is flying high on China’s world-leading economic recovery. It crept higher in offshore trade ahead of the onshore open at 0130 (GMT+0) and sits just shy of a more than two-year peak made on Tuesday.

Read more from the original article: https://www.reuters.com/articl...