The dollar rose from a twoandahalfyear low on Wednesday as investors assessed the likelihood of further fiscal stimulus in the United States, while a rally in riskier currencies lost steam.
The Chinese yuan erased some gains after the New York Times reported that U.S. Presidentelect Joe Biden will not immediately act to remove the Phase 1 trade agreement President Donald Trump signed with China.
Against a basket of major currencies, the dollar index rose 0.2 at 91.34, off the lowest level since late April 2018 it hit overnight.
U.S. Treasury Secretary Steve Mnuchin and House of Representatives Speaker Nancy Pelosi held stimulus talks for the first time since the Nov. 3 election. A bipartisan group of senators and House members proposed 908 billion worth of coronavirus relief measures.
Later on Wednesday, data including the U.S. ADP national employment data and European Union unemployment rate are due.
We have ADP employment data as the only standout in the US calendar today, which should provide some direction for market expectations ahead of Fridays payrolls, said FX strategists at ING in a note to clients.
Still, data is clearly playing second fiddle to vaccine and stimulus news. Markets may retain an upbeat stance on the latter for now as bipartisan talks resume, providing further support to risk assets and reinforcing the bearish dollar argument.
In early trading in London, the euro set a 2020 high of 1.2088 against the dollar, its highest since April 2018. It…