By Gina Lee
Investing.com – The U.S. dollar was down in Asia on Tuesday morning, falling to a two-year low over fresh investor concerns about the U.S. economy’s ability to recover from the impact of COVID-19.
The number of global COVID-19 deaths shot past the 650,000 mark, while the number of cases is almost at the 16.4 million mark, as of July 28, according to Johns Hopkins University data.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies slipped 0.04% to 93.573 by 10:09 AM ET (3:09 AM GMT), continuing its slump from the previous sessions.
But after Republicans unveiled details of the latest $1 trillion stimulus package on Monday, investors will see whether Republicans and Democrats can reach a consensus to pass the package before some earlier measures due to expire at the end of the week.
The euro, which has been on a meteoric rise ever since the EU reached a deal for a EUR750 billion ($879.549 billion) recovery package the week before, also continues to hit the dollar hard.
“With all of this in mind, we would not be surprised to see the dollar fall further,” Capital Economics market economist Oliver Jones told Reuters, with greater tolerance for inflation leaving room for more pressure on U.S. real yields and thereby diminishing a key attraction of holding greenbacks.
The USD/JPY pair was down 0.01% to 105.36.
The AUD/USD pair gained 0.20% to 0.7164 and the NZD/USD pair was up 0.10% to 0.6688. The two Antipodean risk currencies continued their gains against the safe-haven dollar.
The USD/CNY pair fell 0.03% to 6.9931 and the GBP/USD pair gained 0.03% to 1.2885.
Investors will also be looking to the U.S. Federal Reserve’s meeting on Wednesday, where it is widely expected to take a continuous dovish stance.
But some investors were skeptical of the impact any measures announced at the Fed’s meeting would have for the dollar.
“Investors have already priced in significant Fed easing for a long time, so we are not sure where the dovish surprise will come from,” Steve Englander, head of global G10 FX research at Standard Chartered (OTC:SCBFF), told Reuters.
“Over the last eight years, core inflation has hit 2% only six out of 96 months and has been above 2.1% only once. What makes any new tools or new framework so much more powerful?”