Wednesday, August 5 saw the dollar reeling under pressure due to decreasing U.S. yields and a rising Euro. Another reason for the poor performance of the dollar is Congress’s disinterest towards the latest package that was planned for coronavirus relief. Investors are now bracing themselves for a more challenging and difficult economic repair.
Negative perceptions around the U.S. rebound lagging Europe has kept the most common currency under a 2-year high, and is supporting it so that it can repel any bounce back in the dollar.
EUR=EBS was last seen at $1.1808, before testing support twice close to $1.17. This was due to focus turning towards Washington stalemate and US private jobs information later in the day.
Yields Take a Dive
JPY went up to 105.66/dollar as well as gold moved over $2,000/ounce as a dim view of the bond market about recovery in the U.S. made the real yields take a nosedive and the nominal yields also closed to their record lows.
This negative market sentiment was reflected in the statement by Imre Speizer, who is Westpac’s FX analyst in Auckland. Imre mentioned that as there is no agreement about a fiscal package and as such, the USD is getting hit.
He added that if something can be agreed upon in the coming days, then we can expect the dollar to bounce back. But if nothing happens, the dollar will continue to fall for the rest of 2020.
The positive news is that White House negotiators are trying to work in tandem with congressional democrats so that something can be finalized about COVID-19 relief, that too, not later than the end of the week.
But the unemployment benefit of $600/week was allowed to lapse by the lawmakers while they are still at loggerheads. Steven Mnuchin, treasury secretary, warned that the 3.4 trillion USD relief package that democrats were expecting is nowhere close to being approved.