US Markets

FOREX-Dollar dithers in thin trade as Trump passes pandemic aid package

Credit: REUTERS/DADO RUVIC

The dollar largely shrugged off President Donald Trump's decision to relent on a threat to block a COVID-19 aid bill in thin trading on Monday with many investors on holiday.

By Kevin Buckland

TOKYO, Dec 28 (Reuters) - The dollar largely shrugged off President Donald Trump's decision to relent on a threat to block a COVID-19 aid bill in thin trading on Monday with many investors on holiday.

The pound hovered below a 2-1/2-year high in the Asian session following the agreement last week of a narrow Brexit trade deal that does not cover Britain's financial sector.

The dollar index was little changed at 90.151 =USD, following a three-day slide.

Sterling added 0.2% to $1.3565 GBP=, inching back toward the $1.3625 mark it hit earlier this month for the first time since May 2018.

Trump signed into law the $2.3 trillion pandemic aid and spending package, averting a partial federal government shutdown that would have started Tuesday.

Earlier he had cryptically tweeted, "Good news on Covid Relief Bill. Information to follow!" He had previously demanded an increase in stimulus checks for struggling Americans to $2,000 from $600.

The euro was little changed at $1.2216 EUR=EBS, near the 2 1/2-year high of $1.2273 touched this month.

While last week's Brexit deal came as a relief to investors, the bare-bones nature of the pact leaves Britain far more detached from the EU, analysts say, suggesting the discount that has dogged UK assets since 2016 will not vanish soon.

Brussels has made no decision yet on whether to grant Britain access to the bloc's financial market.

Mitsuo Imaizumi, chief FX strategist at Daiwa Securities in Tokyo, expects the pound and euro to decline against the dollar, reaching $1.30 and $1.15 respectively by the end of the summer.

"Regardless of the Brexit deal, cable will be down," he said.

"It’s buy the rumour, sell the fact."

The Australian dollar inched up to 76.082 U.S. cents, toward the 2 1/2-year high of 76.390 reached this month.

The yuan creeped up after China's central bank lifted its official guidance level to the highest in 30 months.

Offshore, the yuan rose 0.1% to 6.5200 per dollar, while onshore it changed hands at 6.5296.

The dollar weakened slightly to 103.455 yen JPY=EBS.

Policymakers at Japan's central were divided on how far they should go in examining yield curve control with some calling for a comprehensive review of the framework, a summary of opinions voiced at the December rate review showed on Monday.

(Reporting by Kevin Buckland; Editing by Stephen Coates)

((Kevin.Buckland@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Markets Videos

    Reuters

    Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

    Learn More