Dollar's Slide Continues As Markets Look Ahead To More Stimulus Measures
The U.S. dollar tumbled against most of its peers, and hit its lowest in several months against some on Monday, amid rising concerns about spikes in coronavirus cases.
Expectations that the Federal Reserve and the government will announce more stimulus measure weighed as well on the currency.
The Fed is scheduled to announce its monetary policy on Wednesday. The bank is widely expected to reiterate its commitment to hold rates near zero for a long term.
Meanwhile, Mitch McConnell, Senate Majority Leader, has unveiled the Republican coronavirus relief plan, and said the legislation would include relief for jobless Americans and another direct payment to individuals of up $1,200.
Also soothing sentiment, data out of China showed profits at the country’s industrial firms rose for a second straight month and at the fastest pace in over a year, adding to signs of economic recovery.
Data released by the Commerce Department said durable goods orders surged up by 7.3% in June after skyrocketing by a downwardly revised 15.1% in May. The continued increase comes following the nosedive seen in March and April.
Economists had expected durable goods orders to soar by 7.2% compared to the 15.7% spike that had been reported for the previous month.
The Dollar Index fell to a low of 93.48 before recovering to 93.70, but was still down nearly 0.8% from previous close.
Against the Euro, the dollar weakened to $1.1782 before recovering some lost ground. Still at $1.1750, it was down more than 0.8%. German business confidence strengthened in July, reports said citing survey data from the ifo institute. The business confidence index rose more-than-expected to 90.5 from revised 86.3 in June. The reading was forecast to rise to 89.3.
The Pound Sterling firmed up to $1.2901 before paring some gains, but was quite strong at $1.2879, gaining about 0.65% from previous close.
The Japanese Yen was stronger at 105.38 a dollar, firming up from Friday’s close of 106.10 yen a dollar. Japan’s all industry activity declined for the fourth month in a row in May and leading index increased, data showed on Monday. The all industry activity index fell 3.5% month-on-month in May, following a 7.6% decline in April, the Ministry of Economy, Trade and Industry revealed.
Industrial production fell 9% in May, following a 9.8% decrease in the preceding month. On a yearly basis, the all industry activity index fell 17.4% in May, following a 13% decline in the prior month.
Against the Aussie, the dollar was down sharply at $0.7150, more than 0.6% from previous close of $0.7105.
The Swiss Franc was up marginally at 0.9200 a dollar, while the Loonie gained about 0.45%, firming up to C$1.3356 a dollar. A sharp rise in gold prices and modestly higher crude oil prices supported loonie’s uptick against the dollar.