By Tom Westbrook
SINGAPORE (Reuters) – The dollar drifted toward a second consecutive weekly loss on Friday, as higher commodity prices and persistent hopes for U.S. stimulus supported investor sentiment and riskier currencies.
Talks have resumed between U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin over coronavirus aid plans, two days after President Donald Trump ended them.
Limited progress kept dollar losses and other majors’ gains modest overnight, but the dollar eased 0.06% against a basket of currencies () and it is down 0.3% for the week.
The prospect of stimulus to support recovery in the world’s biggest economy has weighed on the dollar in the short-term by improving investors’ mood and their willingness to buy riskier assets such as stocks and commodity currencies.
Investors are also regarding improving chances of a Joe Biden presidency as increasing the likelihood of stimulus, since Democrats are pressing for the largest spending package.
“Market participants are travelling with the idea that a new round of U.S. fiscal stimulus is coming regardless, the uncertainty is more around whether it will happen before the election and how big it will be,” said Rodrigo Catril, senior FX strategist at National Australia Bank in Sydney.
“Investor confidence is growing that Biden will win the Presidential election by a clear margin, reducing the risk that Trump disputes the result.”
The risk-sensitive Australian dollar
The New Zealand dollar
The safe-haven Japanese yen
The euro () was steady at $1.1763 and sterling
Elsewhere, a 10% surge in oil prices this week, on optimism about stimulus and supply disruptions owing to a storm in the Gulf of Mexico and strike in Norway, has boosted oil-linked currencies. [O/R]
The Canadian dollar
China’s equity, commodity, currency and bond markets resume trade today after the Mid-Autumn holidays, and traders expect a jump in the onshore yuan to catch up with offshore gains.
” will move closer to ‘s current level of 6.74,” said Commonwealth Bank of Australia analyst Kim Mundy.
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