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Dollar, yen sold as U.S. stimulus hopes boost sentiment.


Date: 08-10-2020
Subject: Dollar, yen sold as U.S. stimulus hopes boost sentiment
The safe-haven dollar and yen nursed losses on Thursday, after the revival of hopes for some U.S. spending improved investor sentiment and appetite for riskier currencies.

A flurry of late-Tuesday tweets from President Donald Trump, after he cancelled talks with Democrats over coronavirus relief, suggested he was open to piecemeal spending measures.

That lifted equity markets and commodity currencies and sank the safe-haven yen to a three-week low of 106.11 per dollar overnight. The dollar was weaker on most other majors.

The euro edged up 0.2% to $1.1767 and held there early in the Asia session. The risk-sensitive Australian dollar lifted off a one-week low and rose about 0.5% overnight to hold at $0.7137 in Asia.

With no fresh clues on stimulus, morning moves were slight and leaned in favour of the greenback. The New Zealand dollar

slipped 0.4% after a central bank official said the bank was "actively working" on negative rates.

Top White House officials have played down the likelihood that anything gets passed, but House Speaker Nancy Pelosi is pursuing a standalone bill for aid to airlines.

"It looks like they still can't agree on a bigger package," said Commonwealth Bank of Australia currency analyst Joe Capurso. "If they could get an agreement on that, you'd get a bit more of a reaction and the U.S. dollar would fall."

The overnight mood had been further supported by hints at even more easing from the U.S. Federal Reserve in the minutes of its September meeting.

Many participants had assumed the economy would be supported by fiscal spending, and some are open to further debate about the Fed's bond buying programme.

"This nuance did not come across in Powell's post-meeting press conference nor in recent speeches," National Australia Bank economist Tapas Strickland said in a note on Thursday.

"In that vein it is worth noting that the Fed's (Loretta) Mester on Monday said she might support shifting asset purchases to more longer-dated bonds."

Speeches at 1610 GMT and at 1800 GMT from Fed members Eric Rosengren and Raphael Bostic, respectively, will be closely watched for any further hints at at the Fed's internal debates.

Sterling and the New Zealand dollar lagged broad gains against the dollar overnight, and were weighed in early Asian trade.

The kiwi dipped 0.4% to $0.6558 after a Reserve Bank of New Zealand official told a media briefing on the bank's policy tools that it was "actively working" on negative interest rates and a funding-for-lending programme.

Concerns that the latest Brexit talks were proving less promising than hoped dragged on the pound, and it was last steady at $1.2918.

Bank of England Governor Andrew Bailey joins a panel discussion on the impact of COVID-19 at 0725 GMT where remarks on negative rates or other policy considerations could move the currency.

Also on the horizon is the U.S. vice presidential debate due to begin at 0100 GMT, infused with fresh significance by Trump's battle with COVID-19. German trade data at 0600 GMT U.S. jobless figures due at 1230 GMT are also awaited.

Source:-economictimes.indiatimes.com

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