Dollar Weakens as Consumers Lose Confidence; Pound Gains on Possible Deal

Wednesday,   18-Nov-2020   01:43 PM (IST)

The dollar edged lower in early European trade Wednesday, weighed by signs the surge in coronavirus vases is hitting the U.S. consumer while the country’s political scene remains divided. At 3:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.2% at 92.245. EUR/USD climbed 0.2% to 1.1883, USD/JPY fell 0.3% to 103.91, while the risk sensitive AUD/USD rose 0.1% to 0.7304. U.S. retail sales rose by just 0.3% in October, at the slowest pace in six months, while the previous month saw a downwardly revised 1.6% gain. This suggests consumers, who have driven the economic rebound, are becoming more cautious given the surging numbers of coronavirus cases in the country. At the same time, the political partisanship in the U.S. shows few signs of changing after outgoing President Donald Trump fired Chris Krebs, who heads the Department of Homeland Security's Cybersecurity and Infrastructure Security Agency, accusing him without evidence of making a "highly inaccurate" statement that affirmed the security of the U.S. election. Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer on Tuesday asked Senate Majority Leader Mitch McConnell to resume talks on a multi-trillion-dollar stimulus package for the U.S. economy. However, it’s debatable what common ground can be found given the febrile nature of U.S. politics. Elsewhere, GBP/USD climbed 0.3% to 1.3276 after the Sun newspaper reported that a trade deal between the EU and the U.K. could arrive "early next week." The currency could strengthen to $1.35 by mid-2021 if the two sides negotiate a free trade agreement, according to a Bloomberg survey of analysts, a level not seen since December 2019. USD/CNY dropped 0.2% to 6.5442, with the yuan climbing to an almost 29-month high, helped by recent strong economic data, pointing to a robust economic recovery by the world’s second largest economy. The Chinese yuan has gained nearly 9% against the dollar since late May, despite the central bank taking various actions to reign in in its strength.