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Dollar Up, With Investors Anticipating Fresh U.S. Stimulus Measures

·2-min read

By Gina Lee – The dollar was up on Monday morning in Asia, with investors awaiting the results of a U.S. Congress debate over fresh COVID-19 stimulus measures later in the week.

Debate over the bill started last week, with some current measures due to expire at the end of July. But Republicans and Democrats are already in disagreement, with Republicans wanting the bill to cost no more than $1 trillion while the Democrats want measures totaling around $3 trillion.

“We see more political pressure on the Republicans to compromise on Democratic objectives because Republicans are trailing badly in polls... Senate Republicans are not in a position to hold back stimulus,” Steven Englander, head of global FX strategy at Standard Chartered (OTC:SCBFF) Bank New York branch, warned in a report.

Meanwhile, COVID-19 numbers continue a never-ending climb. There are almost 14.5 million COVID-19 cases and over 600,000 deaths globally as of July 20, according to Johns Hopkin University data. Dampened hopes of a quick recovery also saw investors turning to the safe-have asset.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies gained 0.23% to 96.112 by 12:01 AM ET (5:01 AM GMT).

The USD/JPY pair was up 0.36% to 107.38. The pair was unaffected by the release of Japanese trade data earlier in the day that showed a worse-than-expected 26.2% decline in June exports year-on-year.

The AUD/USD pair fell 0.18% to 0.6983and the NZD/USD pair was down 0.15% to 0.6546.

The USD/CNY pair gained 0.04% to 6.9940 and the GBP/USD pair fell 0.34% to 1.2522.

Elsewhere in Europe, the Euro rose against the dollar as the EU reached an impasse over a proposed EUR750 billion ($856.969 billion) COVID-19 recovery fund. Some members are pushing to reduce the fund amount, as well as limit the ratio of grants against loans, during a summit ironing out fund details.

Although the impasse could see the summit abandoned and a second try in August, some investors were optimistic on the prospects of a deal.

“I don’t know what to expect from the summit. But even if there is no agreement, the impact will be limited given the euro appears to have a fairly strong momentum these days,” said Yukio Ishizuki, senior strategist at Daiwa Securities.

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