Dollar Loses Ground Against Most Of Its Peers
The U.S. dollar exhibited some strength early on in the session on Tuesday, but lost its way as the day progressed, with traders focusing on the progress or the lack of it in discussions between the White House and Democratic congressional leaders over a major coronavirus aid bill.
The amount of the federal unemployment benefit remains a key sticking point, as Republicans want to slash the benefit to $200 per week and Democrats want to keep the benefit at $600 per week.
A disagreement over funding for state and local governments is also holding up a deal, with President Donald Trump accusing Democrats of seeking to bail out poorly run Democratic-run states and cities.
The dollar index, which rose to 93.83 by mid morning, started to lose ground soon and fell gradually to 93.23 around late afternoon. It was last seen at 93.29, down marginally from previous close.
Against the Euro, the doll firmed up to $1.1723 in the European session, but weakened as the day progressed and was last quoting at $1.1802 a unit of Euro, losing more than 0.3% from Monday’s level. Preliminary data from Eurostat showed that euro area industrial producer prices increased for the first time in five months in June and at a faster than expected pace, even though economic activity remained damped by the Covid-19 containment measures in most of the countries in the EU.
The producer price index for Eurozone rose 0.7% from May, when it fell 0.6%. Economists had forecast a 0.5% increase.
The Pound Sterling was little changed at $1.3073, after having fetched $1.3018 early on in the session.
The Japanese Yen was stronger at 105.74 a dollar, compared with 105.95 yen a dollar Monday evening, Overall consumer prices in the Tokyo region were up 0.6% on year in July, the Ministry of Internal Affairs and Communications said. That exceeded expectations for an increase of 0.4% and was up from 0.3% in June.
Core CPI, which excludes volatile food prices, advanced an annual 0.4%, again exceeding expectations for 0.2% rise, which would have been unchanged.
On a seasonally adjusted monthly basis, overall inflation and core CPI both added 0.3%.
Against the Aussie, the dollar weakened to 0.7163, giving up about 0.55% from 0.7124. The Reserve Bank of Australia today left its record low interest rate and quantitative easing unchanged. The board of Reserve Bank of Australia, governed by Philip Lowe, decided to maintain cash rate and the targeted yield on three-year government bonds of 25 basis points.
It is likely that fiscal and monetary stimulus will be required for some time given the outlook for the economy and the labour market, Lowe said in a statement. The bank vowed to maintain accommodative approach as long as it is required.
The Swiss franc strengthened to 0.9133 a dollar, firming up from 0.9178.
The Loonie was stronger at 1.3327 a dollar, riding on higher crude oil prices.
In U.S. economic news, a report from the Commerce Department showed a substantial increase in new orders for manufactured goods in the month of June. The report said factory orders soared by 6.2% in June after skyrocketing by a revised 7.7% in May.
Economists had expected factory orders to jump by 5% compared to the 8% spike originally reported for the previous month.