FOREX-Dollar wobbles as markets await U.S. presidential debate

  • 9/30/2020
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* Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E TOKYO, Sept 30 (Reuters) - The dollar edged down in Asian trade on Wednesday as investors counted down to the first U.S. presidential debate between President Donald Trump and Democratic challenger Joe Biden. The 90-minute presidential debate at 0100 GMT will be closely tracked by financial markets with some political analysts seeing it as Trump’s best chance to get on top of a race he has consistently lagged in opinion polls. “There is no consensus in the market on how either candidate’s victory will move the dollar,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities. “If, for example, the debate turns out to be a perceived victory by Trump, it’s going to be interesting to see how the markets move-- particularly the dollar, U.S. stocks futures and 10-year Treasury yields,” he said. The dollar index against a basket of currencies fell 0.32% to 93.858, after hitting a two-month high last week. Also weighing on the greenback were month- and quarter-end currency flows, while better-than-expected U.S. economic data also dented its perceived safe-haven bid. U.S. consumer confidence rebounded more than expected in September as households’ views of the labour market improved. The euro was steady at $1.1742, having hit a one-week high of $1.1746 overnight. Against the yen, the single currency changed hands at 124.04 yen, hovering near a two-week high of 124.11 yen. The dollar was little changed against the Swiss franc at 0.9195 franc, after falling as low as 0.9191 franc overnight . Against the yen, the greenback weakened slightly to 105.67 yen, a fraction below a two-week high of 105.74 it marked overnight. Markets also remain focussed on progress made around a U.S. fiscal stimulus packaged to cushion the coronavirus blow. U.S. House Speaker Nancy Pelosi said on Tuesday she hoped to have a coronavirus aid deal with the White House this week, after speaking with Treasury Secretary Steve Mnuchin and making plans for further talks on Wednesday. Pelosi said on Monday Democratic lawmakers unveiled a new $2.2 trillion fiscal stimulus bill, but in an interview with CNBC, White House economic adviser Larry Kudlow made clear that the White House still views the updated figure as too high. “We believe it is unlikely the stimulus bill progress in its current form. The House Democrats stimulus bill is more than $1 trillion above what key Republican policymakers are willing to consider,” said Commonwealth Bank of Australia currency analyst Kim Mundy in a note. “The U.S. economic recovery is at risk without more fiscal stimulus and as a result, USD is vulnerable to additional upside in the short term.” On the data front, China releases both official and private manufacturing PMIs for September later in the morning. A Reuters poll on Monday showed China’s factory activity likely expanded at a slightly faster pace in September, as the economy extends a steady recovery from the coronavirus crisis. Sterling was steady at $1.2864 against the dollar. The British pound initially gained overnight on hopes for a Brexit deal, but retreated after the Bank of England’s governor kept the door open for using sub-zero interest rates if needed. The dollar stepped back against commodity currencies such as the Australian and New Zealand dollars. The Aussie edged 0.18% higher to last sit at $0.7148, while the kiwi firmed against the dollar, last fetching $0.6599. (Reporting by Eimi Yamamitsu Editing by Shri Navaratnam)

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