By Gina Lee
Investing.com – The dollar was down on Wednesday morning in Asia over continued optimism over the U.S. Congress passing the latest stimulus measures before the Nov. 3 presidential election, boosting risk sentiment and pushing the dollar down to a near one-week low.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged down 0.15% to 92.963 by 9:52 PM ET (1:52 AM GMT).
President Donald Trump signaled that he was willing to accept a package with a larger price tag despite Republican opposition, saying on Tuesday, “I want to do it even bigger than the Democrats.”
House of Representatives Speaker Nancy Pelosi also was hopeful that the Republican-Democrat gap on the stimulus measures’ price tag is narrowing, saying, “I hope so. That’s the plan,” for an agreement to be reached the following week.
Stimulus measures are seen as a short-term weight on the greenback, as spending supports the economy and increases investors’ risk appetite.
The expectations also sparked a selloff in U.S. bonds, and the Federal Reserve will release its ‘Beige Book’ economic survey later in the day.
The USD/JPY pair inched down 0.09% to 105.40, with investors retreating from the safe-haven yen.
The AUD/USD pair was up 0.31% to 0.7068, with the Westpac/Melbourne Institute (MI) Leading Index, a preliminary indication of retail sales figures, increasing 0.2% month-on-month. The index last recorded a 0.5% growth.
The NZD/USD pair gained 0.32% to 0.6598, with the Antipodean risk currencies seeing a cap on gains over expectations of negative rates in New Zealand, and monetary easing across the Tasman Sea in Australia.
“All eyes are on whether a U.S. stimulus bill is agreed upon … if U.S. policymakers manage to agree on fiscal deal, the dollar can edge lower especially against commodity sensitive currencies,” Commonwealth Bank of Australia (OTC:CMWAY) currency analyst Kim Mundy said in a note.
“But without a more aggressive U.S. fiscal thrust, the U.S. economic recovery is at risk and the dollar is vulnerable to a renewed bout of strength in the short-term,” the note added.
The USD/CNY pair edged down 0.14% to 6.6658. The yuan continues to bask in the glow of data released earlier in the week suggests that China is leading the economic recovery from the COVID-19 pandemic. Offshore yuan was headed towards a more than two-year peak on Tuesday.
The GBP/USD pair edged up 0.17% to 1.296. Investors continue to keep an eye on the progress of Brexit talks between the U.K. and the European Union.
Meanwhile, European Central Bank President Christine Lagarde and chief economist Philip Lane will host a broad strategy review event in Frankfurt later in the day.