U.S. dollar bank notes are arranged for a photograph on September 7, 2017 in Hong Kong.
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The dollar fell against most of its peers on Thursday amid fading hopes for a compromise between Republicans and Democrats over additional stimulus for the U.S. economy.
The Australian dollar rose after better-than-expected jobs data eased concerns about a persistent coronavirus outbreak in the country’s second-largest city.
The greenback was hampered by a decline in Treasury yields, but analysts say this is likely only a temporary setback because U.S. lawmakers will eventually agree to more stimulus to help the economy recover from the coronavirus.
“The dollar needs positive news on stimulus to rise further, but I’m sure we’ll get there, because these politicians can’t go back to their constituencies empty handed,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.
“Once this happens, gains in dollar/yen could be a catalyst for dollar gains against other currencies.”
Against the euro, the dollar fell to $1.1813, adding to a 0.4% decline on Wednesday.
The British pound rose 0.25% to $1.3067.
The dollar fell 0.2% against the safe harbour Swiss franc to 0.9105.
The dollar pulled back from a three-week high to trade at 106.65 yen.
The onshore yuan briefly rose to a five-month high before steadying at 6.9380 per dollar.
President Donald Trump accused congressional Democrats on Wednesday of not wanting to negotiate over a U.S. coronavirus aid package as top Republican and Democratic negotiators traded blame for a five-day lapse in talks over relief legislation.
The pandemic has taken a particularly heavy toll on the United States, where it has killed more people than any other country. Millions of U.S. workers have lost jobs, and supplemental federal unemployment benefits expired last month.
Market sentiment has swung between optimism and pessimism, but analysts argue that more stimulus is the most likely outcome because without it the U.S. economic recovery could stall.
The U.S. dollar index against a basket of major currencies fell 0.2% on Thursday in Asia but was still well above the two-year low it reached last week.
Elsewhere in currencies, the Australian dollar rose 0.2% to $0.7176, holding onto gains after data showed the economy created three times as many jobs as expected and the jobless rate fell from a 22-year high in July.
The positive jobs data suggests the economy remains resilient in the face of an ongoing outbreak of coronavirus cases in Melbourne.
Across the Tasman Sea, the New Zealand dollar bought $0.6581, stabilizing after the country’s central bank on Wednesday expanded quantitative easing and flagged the prospect of negative interest rates.