The US dollar is kick off the trading week relatively flat, hovering at its lowest level in three weeks. With not much economic data to work with, investors are weighing fiscal stimulus in Washington and the 2020 presidential election in a couple of weeks. Will traders adopt a wait-and-see approach to the greenback for the remainder of October?
On Sunday, President Donald Trump urged Congress to approve a stripped-down version of the fiscal stimulus and relief package. The White House is recommending a $1.8 trillion bill that would include direct payments to Americans to help mitigate the damage from the coronavirus pandemic. But the Democrats want a $2.2 trillion bill to be given approval.
For weeks, the dollar has been impacted by on-again, off-again negotiations between the administration and Democrats. The president went as far as calling off talks unless legislation that only contained $1,200 checks and other financial aid was delivered to his desk. But then he restarted negotiations the next day as financial markets plummeted.
Meanwhile, with less than a month until Election Day in the US, investors are betting on former Vice President Joe Biden winning. This, according to analysts, would be bullish for the stock market in the short-term because his administration would likely approve a larger economic package. The flurry of presidential polls show Biden with a significant lead over the incumbent, but the swing states, such as Ohio, Pennsylvania, Florida, and Iowa, are tighter.
Uncertainty from the coronavirus pandemic continues to affect the buck. The nation is nearing eight million cases and 220,000 deaths from COVID-19, and health authorities are warning of a resurgence amid the cold and flu season. It is unclear just how far away the nation is from a vaccine, and neither side has proposed a solution to eradicate or diminish the highly infectious respiratory illness.
On the data front, the next several days will be dominated by inflation numbers. On Friday, September retail sales, industrial production, and manufacturing output will also be released.
The US Dollar Index, which measures the greenback against a basket of currencies, was unchanged at 93.05. The index is coming off a weekly loss of 0.5%. Year-to-date, the index has fallen about 3.5%.
The USD/CAD currency pair dipped 0.02% to 1.3116, from an opening of 1.3122, at 14:13 GMT on Monday. The EUR/USD tumbled 0.16% to 1.1813, from an opening of 1.1827.
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