Dollar Pares Early Gains, Turns Sluggish
The U.S. dollar pared some gains and largely stayed sluggish against its peers as the focus remained on the results of U.S. presidential election.
The dollar’s recovery from lower levels was due largely to the assumption that Democrats were unlikely to win majority in the U.S. Senate, even as their candidate Joe Biden appeared to be heading for a victory in the presidential race.
In the event of Democrats failing to take control of the Senate, any massive stimulus proposal by them is certain to face opposition from the Republicans, and this could significantly support dollar’s rise.
Traders were also looking ahead to the Federal Reserve’s monetary policy statement, due on Thursday.
The dollar index was last seen at 93.42, down 0.14% from previous close. Earlier, the index rose to 94.30 in the Asian session.
In economic news, private sector employment in the U.S. increased by much less than expected in the month of October, according to a report released by payroll processor ADP on Wednesday.
A report released by the Commerce Department showed the U.S. trade deficit narrowed to $63.9 billion in September from a revised $67.0 billion in August. Economists had expected the deficit to narrow to $63.8 billion from the $67.1 billion originally reported for the previous month.
Growth in U.S. service sector activity slowed by more than expected in the month of October, according to a report released by the Institute for Supply Management on Wednesday.
The ISM said its services PMI dipped to 56.6 in October from 57.8 in September, although a reading above 50 still indicates growth in the service sector. Economists had expected the index to edge down to 57.5.
Against the Euro, the dollar was flat in late afternoon trades, quoting at $1.1724 a unit.
The Pound Sterling was weaker by about 0.6%, fetching $1.1986, compared to $1.3064 on Tuesday.
The Yen was flat at 104.50 a dollar. In the Asian session, it touched a low of 105.35 a dollar, but later firmed up to 104.15.
The Aussie was firmer, fetching 0.7185 a unit, up from $0.7164 Tuesday afternoon.
The Swiss franc was up marginally at 0.9121, edging up from 0.9127 a dollar.
The Loonie was gaining at C$1.3120 a dollar, nearly 0.25% up from C$1.3144, riding on crude oil’s sharp uptick.
The material has been provided by InstaForex Company – www.instaforex.com