US Dollar Strengthens on Renewed Hopes for Fiscal Stimulus

US Dollar Strengthens on Renewed Hopes for Fiscal Stimulus

Posted Friday, November 20, 2020 by
Arslan Butt • 1 min read

The US dollar is regaining some of its strength on Friday after posting losses for several sessions after US Treasury Secretary Steven Mnuchin ended the Fed’s emergency schemes lending money to business, non-profits and local governments to combat the fallout from the pandemic. At the time of writing, the US dollar index DXY is trading around 92.25.

Mnuchin took the step to reappropriate a portion of the $455 billion worth of funds under the Treasury Department for the CARES Act, maintaining that the programs have achieved their objectives. However, the decision was not welcomed by Fed, which insisted that such schemes were necessary for the “still-strained and vulnerable economy”.

Meanwhile, the US dollar enjoyed some support over emerging news reports that Republican leaders of the Senate were ready to restart negotiations on the coronavirus relief package, raising hopes that the next round of fiscal stimulus could be finalized soon. The dollar has been losing ground against its major peers over the past few sessions over optimism around vaccines to combat the COVID-19 pandemic.

So far this week, the US dollar has lost around 0.34% of its value against other leading currencies. While the Euro and the Japanese yen are trading somewhat steady against the greenback, the GBP has weakened after news reports of European leaders insisting that no-deal Brexit plans be made public as the deadline for the transition period nears.

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