Let us check the market. Congress eyed that dollar’s August bounce retraces slightly. Yen, euro off overnight troughs. Ahead after no surprise from RBA, Aussie edges. There is political wrangling over a United States relief plan. Moreover, the gloomy economic outlook kept investors shy of the currency. Thus, on Tuesday, a rebound in the dollar faltered.
Some investors trimmed their short positions. So, it pushed the currency as high as $1.1695 per euro on Monday. It was 1.8% above last week’s two-year low. Thus, after its worst month in a decade in July, the greenback started August on a firm note.
However, it settled back to $1.1766 in Asia on Tuesday, and that only carried it so far. Meanwhile, yen and other majors lifted from troughs. The Australian dollar edged ahead to $0.7134. It was after the central bank offered no surprises by holding policy steady.
The United States
Investors are revising judgment on whether a United States economy with 30 million people out of work can lead the world’s recovery. It is despite better-than-expected manufacturing data and an encouraging slowdown in new virus cases.
Moh Siong Sim works at Bank of Singapore. He is an FX analyst there. Sim said that they are still in a situation where the market wants to believe the recovery is on track. Nevertheless, the market is still worried concerning the COVID situation.
Moreover, he added that the fiscal wrangling in the United States is the next critical test for risk sentiment.
On Monday, White House negotiators and top Democrats in Congress said that they had made headway in talks on the latest coronavirus relief bill. Nevertheless, an expired $600-per-week unemployment benefit remains a sticking point.
It is not clear if an agreement will be enough to shift the market perception that the United States economic recovery lagged those of Asia and Europe.
That is the leading news of the market.