Dollar demand weakens as the US government hinted another stimulus package


Regardless of strong economic figures, the US dollar fell against most currencies, as the US government hinted that another stimulus package could be adopted to help dampen the economic downturn.

House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin are set to resume negotiations for this soon.

"New hopes of a boost in the US economy sparks desire to spend dollars," said Joe Manimbo, senior market analyst at Western Union Business Solutions. " Such a rhetoric is really great, however, until it is finalized and signed, the market will be skeptical," he added.

Volatility also increased on the US dollar last Tuesday, largely due to the first debate of presidential candidates Donald Trump and Joe Biden. Their discussion heightened fears that the results of the November elections could be challenged.

During the debate, aside from discussions on controversies regarding health and economics, personal insults as well as repeated interruptions were directed to Trump.

"The debate only confirmed that the election could be contested," said Edward Moya, senior market analyst at OANDA.

Meanwhile, the dollar was supposed to rise due to improving US statistics, especially since jobs in the private sector have increased by 749,000, according to the ADP's national employment report. However, Andrew Hunter, senior economist at Capital Economics, said that despite the gains seen in the figures, employment is still well below pre-crisis levels.

"The labor market is still far from full recovery," Hunter said.

In addition, the latest GDP data for the United States show a 31.4% year-on-year collapse in the second quarter of 2020, the deepest drop in output since the government began recording in 1947.

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