By John McCrank
NEW YORK, Oct 22 (Reuters) - The dollar index edged higher
on Thursday, backing off of a seven-week low as hopes for a
coronavirus relief package ahead of the Nov. 3 U.S. elections
faded and COVID-19 cases surged around the world, boosting
demand for safe-haven assets like the greenback.
Investors were also digesting new U.S. jobless claims data
that showed a bigger-than-expected drop, but remained at
extremely high levels, indicating a slowdown in the labor market
and broader economic recovery from the coronavirus pandemic as
the boost from previous fiscal stimulus fades.
Negotiations toward a new coronavirus aid bill were thrown
into question after Republican President Donald Trump took to
Twitter late on Wednesday to accuse Democrats of being unwilling
to find an acceptable compromise and amid deep opposition among
Senate Republicans to a large new stimulus package. But U.S. House of Representatives Speaker Nancy Pelosi on
Thursday said negotiators were making progress and that
legislation could be hammered out "pretty soon." "All this back-and-forth between Pelosi and the White House
may not actually yield anything because at the end of the day,
it seems like they are running out of time," said Kathy Lien,
managing director at BK Asset Management.
"The near possibility that we're going to get more bad news
or at least no good news from now to the election is driving
investors out of the greenback," she said.
The stimulus package is likely to come up when Trump faces
off against Democratic rival Joe Biden later on Thursday in
their final debate ahead of the elections. News that Europe has seen the number of coronavirus cases
surge to a record high, with Spain becoming the first Western
European country to exceed 1 million infections, added to the
cautious tone in world markets. This backdrop appeared to favor the dollar, which had fallen
for the last three days against a basket of other major
currencies.
The dollar index =USD was last trading at 92.893, 0.18%
firmer on the day and above the 92.469 low hit on Wednesday that
marked the lowest level since Sept. 2.
The euro EUR=EBS was 0.3% lower versus the dollar at
$1.1862, down from Wednesday's one-month highs of $1.18805.
"The euro has been undeservingly strong, given the
significant increases in COVID-19 cases and the fact that the
ECB will have no choice but to lower interest rates," said Lien.
She said she will be closely watching PMI reports from the
euro zone due out on Friday, which could trigger a more
aggressive decline in the euro.
The tone in currency markets was generally subdued as
investors waited for new impetus.
"The U.S. presidential elections are only 12 days away,
before that nobody wants to commit too much to a particular
direction in euro/dollar," said Commerzbank FX analyst Esther
Reichelt.
Having hit six-week highs on Wednesday amid Brexit optimism,
sterling too pulled back against the U.S. currency. The British
pound was last down 0.35% at $1.3103 GBP=D3 .
The Australian dollar AUD=D3 was 0.1% softer versus the
greenback at $0.7110, while the New Zealand dollar was 0.21%
higher at $0.6670 NZD= - up from the $0.6551 low touched on
Tuesday.
Elsewhere, the Chinese yuan retreated from a 27-month high
hit a day earlier on signs the authorities have become
increasingly wary over the recent rapid gains in the currency.
The offshore Chinese yuan CNH=EBS was last up 0.42% at
6.6709 per dollar.
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Currency bid prices at 9:48AM (1348 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.1826 $1.1862 -0.30% +5.49% +1.1867 +1.1812
Dollar/Yen JPY=D3 104.6900 104.5700 +0.11% -3.61% +104.7750 +104.5500
Euro/Yen EURJPY= 123.79 124.02 -0.19% +1.51% +124.0900 +123.6700
Dollar/Swiss CHF=EBS 0.9070 0.9053 +0.19% -6.27% +0.9080 +0.9051
Sterling/Dollar GBP=D3 1.3103 1.3147 -0.35% -1.22% +1.3152 +1.3083
Dollar/Canadian CAD=D3 1.3150 1.3144 +0.05% +1.23% +1.3177 +1.3133
Aussie/Dollar AUD=D3 0.7110 0.7117 -0.10% +1.33% +0.7119 +0.7085
Euro/Swiss EURCHF= 1.0726 1.0737 -0.10% -1.16% +1.0748 +1.0721
Euro/Sterling EURGBP= 0.9022 0.9018 +0.04% +6.72% +0.9046 +0.9015
NZ NZD=D3 0.6670 0.6655 +0.21% -0.89% +0.6675 +0.6634
Dollar/Dollar
Dollar/Norway NOK=D3 9.2290 9.2075 +0.26% +5.23% +9.2600 +9.2020
Euro/Norway EURNOK= 10.9150 10.9390 -0.22% +10.95% +10.9660 +10.9060
Dollar/Sweden SEK= 8.7655 8.7254 +0.15% -6.23% +8.7854 +8.7220
Euro/Sweden EURSEK= 10.3657 10.3503 +0.15% -0.99% +10.3959 +10.3485