The dollar held above a 2018 low against other major currencies on Friday ahead of fresh U.S. jobs data likely to give clues on the extent of fiscal stimulus needed to prop up the coronavirushit economy.
The greenback bounced off a nearly threeyear low on Thursday as a rise in U.S. yields triggered some unwinding of bearish bets on the currency, with traders taking profits against the euro in particular.
Democrats won effective control of the Senate this week, while chaos gripped Washington. Congressional Democrats on Friday weighed impeaching President Donald Trump for a second time after his false claims of election fraud helped encourage a mob that stormed the U.S. Capitol.
The Democrats Senate seat wins give Presidentelect Joe Biden scope to push through more spending, which analysts predict will fuel risk appetite and be negative for bonds and the dollar.
I think once this euphoria dies down, the dollar is likely to resume its downtrend trend, because I dont think the Fed will be so eager to taper, said Marshall Gittler, head of investment research at BDSwiss, in a note.
I think the U.S. employment picture is likely to lag that of other countries and therefore the U.S. tightening cycle is likely to lag. That makes the picture for the dollar negative, in my view.
The dollar index dropped 7 in 2020 and as much as 0.9 in the first few days of the new year on expectations of U.S. fiscal stimulus.
On Friday, the index was last up 0.1 at around the 90 mark, after…