LONDON: The dollar remained weak on Wednesday as a US coronavirus relief package stalled in Congress and US bond yields sank, with investors weighing prospects of further monetary easing to support the economy.
White House negotiators and congressional Democrats are trying to reach a deal on a package by the end of this week, and Treasury Secretary Steven Mnuchin said on Tuesday that progress had been made on key components of the bill.
A hardening perception that the US economic recovery is lagging Europe has buttressed the euro, pushing it above US$1.19 in the last couple of days.
Early on Wednesday, the common currency traded up 0.1% at US$1.1815.
Most other major currencies were also up against the dollar, pushing its index towards last week’s two-year low of 92.53. It traded at 93.05 as the price for gold surpassed US$2,000, a record high.
“The ongoing fall in US real yields is helping to lift the price of gold and weakening the US dollar,” said Lee Hardman, currency analyst at MUFG, adding that the bank had lowered its forecasts for the dollar on the assumption that the Federal Reserve will loosen policy further this year.
US 10-year Treasury yields were close to the five-month low they hit on Tuesday. – Aug 5, 2020, Reuters
