Dollar edges up after Mnuchin halts some Fed emergency funds

Friday,   20-Nov-2020   03:10 PM (IST)

The dollar edged up against a basket of currencies in early London trading, its downward trend was interrupted when U.S. Treasury Secretary Steven Mnuchin called an end to some of the Federal Reserve’s pandemic lending. Mnuchin’s move re-appropriated some $455 billion allocated to the Treasury for other spending, but some investors were concerned about ending programmes that they think have played a vital role in reassuring markets. 10-year U.S Treasury yields fell to their lowest since Nov. 9. The Fed also said it “would prefer that the full suite of emergency facilities established during the pandemic continue to serve their important role as a backstop,” a rare open confrontation with the government. The announcement curtailed optimism created by reports that Republican and Democratic Senators had agreed to resume talks on another coronavirus stimulus package. The dollar index was at 92.335 at 0801 GMT, flat on the day after it slipped overnight then picked up again as European markets opened. Analysts also cited rising COVID-19 cases as a reason for caution. Still, the dollar was down around 0.5% on the week, as currency market sentiment has been buoyed by U.S. President-elect Joe Biden’s victory and the progress towards a COVID-19 vaccine. The Australian dollar - seen as a liquid proxy for risk appetite - is having its best month versus the U.S. dollar since April, in terms of percentage change. The Japanese yen was down around 0.1% against the dollar, at 103.84 at 0824 GMT. The euro was flat against the dollar, at $1.18725 at 0825GMT , on track for a small weekly gain.