By Gina Lee
Investing.com – The dollar was up on Tuesday morning in Asia, despite edging closer to three-week lows and some investors stubbornly holding onto hopes of large U.S. stimulus measures to prop up the COVID-19 ravaged economy before the Nov. 3 presidential election.
“It seems there is a strong optimism that eventually there will be stimulus. It is hard to argue against fiscal expansion given the COVID-19 epidemic is almost like a natural disaster,” SMBC Nikko Securities chief currency and foreign bond strategist Makoto Noji told Reuters.
The U.S. Dollar Index, which tracks the greenback against a basket of other currencies, edged up 0.11% to 93.207 by 10:04 PM ET (2:04 AM GMT).
But other investors were skeptical that Republicans and Democrats would reach a consensus and pass the measures before the election, with Democrat Joe Biden continuing to widen his lead against President Donald Trump and a Biden victory expected to bring big stimulus measures.
Should Biden triumph over Trump on November 3, his campaign pledge to raise corporate taxes is seen as negative for the greenback as it would reduce returns from investments in the U.S.
The USD/JPY pair inched up 0.01% to 105.31.
The USD/CNY pair edged up 0.19% to 6.7580, with investors awaiting Chinese trade data, including exports, imports and the trade balance, due later in the day. The offshore yuan is still reeling from the impact of the People’s Bank of China’s removal of financial institutions’ reserve requirement ratio when conducting foreign exchange forwards trading. The move, an attempt to curb the recent appreciation in the yuan, also lowered the cost of shortening the currency.
President Xi Jinping will also deliver “a crucial speech” in Shenzhen on Wednesday during celebrations to mark the city’s designation as a special economic zone.
The AUD/USD pair lost 0.56% to 0.7167, with the AUD impacted by China’s reported suspension of Australian coal imports and the Australian government currently seeking clarity from China.
Across the Tasman Sea, the NZD/USD pair edged down 0.20% to 0.6632 ahead of the Oct.17 general election, which incumbent Prime Minister Jacinda Ardern is widely expected to win.
The GBP/USD pair edged down 0.16% to 1.3043, remaining above the key $1.30 level. Hopes for a Brexit deal with the European Union, with only two days remaining until Prime Minister Boris Johnson’s self-imposed deadline of Oct.15, outweighed worries over Johnson’s new COVID-19 restrictions on Monday. The new system involves a three-tiered system of local lockdowns, putting further pressure on the economy.