U.S. stimulus impasse takes steam out of dollar rebound

Wednesday,   12-Aug-2020   02:41 PM (IST)

The dollar struggled to hold recent gains on Wednesday as political wrangling over a stimulus package for the U.S. economy halted its recent rebound. Investors are watching for any signs that a political impasse in Washington over a further rescue package for the pandemic-hit economy can be overcome. The dollar, which has held above a two-year low hit on Thursday of 92.495, was down nearly 0.1% against a basket of currencies at 93.643, after shedding gains made in Asian trading. U.S. inflation figures due at 1230 GMT are expected to show consumer price growth drift down to 1.1% on a year-on-year basis, from 1.2% in June. The dollar continued to make gains against the yen, with the Japanese currency down nearly 0.3%, after slumping to 106.825 earlier, its lowest since July 24. Improved U.S. debt yields have pressured the yen by luring investment from zero-yielding Japan. Sterling was flat, despite data showing the UK economy had entered a deep recession, as signs of a recovery in June provided some support for the currency. The New Zealand dollar fell 0.6% to $0.6541, after the country's central bank held rates but surprised markets by extending its bond buying programme and putting a little more emphasis on the possibility of negative rates.