Investors waited for developments on whether lawmakers in Washington could reach a compromise on new stimulus. A new stimulus is to support the economic recovery from the coronavirus pandemic ahead of next month’s election. Thus, on Tuesday, the United States dollar was little changed.
On Tuesday, Treasury Secretary Steven Mnuchin and House of Representatives Speaker Nancy Pelosi were expected to speak by phone. The topic is economic relief after talking about an hour on Monday. They will continue their recent flurry of activity working towards a deal on legislation.
Nevertheless, against a basket of six major currencies, the United States dollar remained rangebound, last sitting at 93.407. It was because expectations for a deal were muted. From a two-month high reached at the end of September, the greenback has fallen around one percent. It is in contrast with United States equity markets, which rose.
Boris Schlossberg is managing director of FX strategy at BK Asset Management. Schlossberg said that pretty much everybody has given up on the idea that they will have a fiscal spend before the election. Thus, it is a matter of how the United States dollar will react post-election. There is the spread of the coronavirus among key policymakers, including United States President Donald Trump. Thus, its complicated efforts by Congress to reach an agreement on relief funds.
On Monday, Trump returned to the White House. It happened after a three-day stay in a military hospital. There he received treatment for COVID-19.
Such development is reducing political uncertainties. It helped to lift global stocks to more than a two-week high. The lead taken by Democratic presidential nominee Joe Biden in polls weighs on the United States currency.
Lee Hardman works for MUFG. He is a currency analyst there. So, Hardman said that the increasing possibility of a ‘blue wave’ (Democratic control of the Congress and White House) would open the door for much-needed fiscal stimulus.
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