Dollar Down Despite Uncertainty Over Stimulus Package 

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    September, 2020

    On Friday morning in Asia, the dollar was down after earlier gains were reversed over doubts about the latest U.S. package. 

    The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.03% to 94.365 by 9:52 PM ET (1:52 AM GMT). 

    On Thursday, U.S. markets rose over increased hopes that the U.S. Congress would break a months-long impasse to pass the latest COVID-19 stimulus measures. 

    A $2.2 trillion COVID-19 stimulus package that has been reported that the democrats in the U.S. House of Representatives have been working on, could be voted on next week. There is also a suggestion that the House of Representatives Speaker Nancy Pelosi and U.S. Treasury Secretary Steven Munchin could resume stalled stimulus talks. 

    Meanwhile, data released on Thursday showed that the number of Americans claiming unemployment over the past week increased to 870,000, indicating a slowdown in the economy recovery and highlighting the pressing need for Congress to pass the support measures. 

    “We have seen lately the dollar gaining as risk assets are sold off. We need to see whether this will continue beyond the end of this month,” Daiwa Securities Senior strategist Yukio Ishizuki told Reuters. 

    The USD/JPY pair inched up 0.07% to 105.47 

    The USD/CNY pair was down 0.22% to 6.8123. The offshore yuan reversed its decline over the past week after FTSE Russell’s announcement that Chinese government bonds will be added to the WGBI index starting in 2021. 

    “Foreign ownership of Chinese government bonds has picked up steadily. The inclusion in the WGBI benchmark will prompt additional foreign flows into the Chinese bond market and support the yuan,” Commonwealth Bank China economist Kevin Xie told Reuters. 

    TECHNICAL OUTLOOK 

     

     

     

    In the daily charts of GBP/USD, the pair opened at 1.2748 early morning on Friday, Asia session.  

    The pair was supported at the 1.27129 support levels and bounced higher pushing gains for the sterling. Further confirmation of the price threading higher may be seen on Monday next week. Sterling bears however are eyeing out for the price to breakdown this support level to further confirm their positions. 

    The GBP/USD pair inched up 0.04% to 1.2754. The pound was supported by U.K. Chancellor of the Exchequer Rishi Sunak’s ‘winter plan’ proving limited support for workers as the country continues to battle against a second wave of COVID-19. 

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