Hopes For Fresh Stimulus Send US Dollar Lower

Posted Friday, September 25, 2020 by
Arslan Butt • 1 min read

On Friday, the US dollar has dipped slightly from two-month highs over rising hopes for more stimulus initiatives to support economic recovery in the country. At the time of writing, the US dollar index DXY is trading around 94.34.

After considerable delay, recent news reports indicate that the coronavirus relief bill may be making progress. Discussions between House of Representatives’ Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin could restart soon even as Democrats in the House of Representatives work out a stimulus package worth $2.2 trillion. The possibility of more stimulus has weakened the dollar against its major rivals.

Over the past few sessions, the greenback had made gains as a result of the risk-off mood in the markets as Europe and Britain announced fresh restrictions to counter a resurgence in cases. This renewed fears that economic recovery could be delayed further, sending investors away from riskier currencies and instruments and towards the safety of the US dollar.

The reserve currency has also come under pressure after the release of the latest weekly jobless claims report during the previous session. The number of people filling for unemployment benefits rose from 860k to 870k, reinforcing fears that economic recovery has stalled in the US.

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