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FOREX-Dollar dips as risk sentiment lifted by stimulus hopes

By Karen Brettell and John McCrank

NEW YORK, Oct 5 (Reuters)The safe-haven U.S. dollar dipped on Monday and riskier currencies outperformed on optimism that U.S. lawmakers will agree on new stimulus to blunt the economic impact of the coronavirus, while investors awaited updates on the severity of President Donald Trump’s COVID-19 symptoms.

Stocks rallied on Monday on the stimulus hopes and as Trump said he would be discharged from the hospital where he in his fourth day of treatment for the virus. .N

I think the market is convinced that sooner or later fiscal stimulus will materialize in the wake of data that continues to show a moderating U.S. economy,” said Joe Manimbo, senior market analyst, at Western Union Business Solutions in Washington.

The optimism was supported by White House Chief of Staff Mark Meadows, who said there is still potential for a deal among lawmakers in Washington on more economic relief, and that Trump is committed to getting the deal done.

Failure to reach a deal, however, would likely be positive for the dollar, which on Monday fell 0.32% against a basket of major currencies =USD.

“We think that the prospects for stimulus before the election are still very low,” said Erik Nelson, a macro strategist at Wells Fargo in New York. “We’re of the view that we should fade this dollar weakness we’re seeing today, and in particular against some of these higher risk currencies like the Norwegian krone or the Australian dollar.”

The euro EUR= gained 0.50% to $1.1774, the highest since Sept. 21.

The Australian dollar AUD= rose 0.17% to $0.7174 and the greenback dipped 0.72% to 9.2327 krone NOK=.

Trump’s COVID-19 diagnosis adds another layer of uncertainty to the U.S. Nov. 3 presidential election, and what it could mean for the greenback.

“There isn’t a clear consensus on how the dollar should trade on this degree of political uncertainty in the U.S.,” said Jane Foley, senior FX strategist at Rabobank.

Trump said he will leave the U.S. military hospital where he was being treated for COVID-19 later on Monday, adding that he felt “really good.”

The U.S. Federal Reserve will release minutes from its September meeting on Wednesday and the European Central Bank will release its latest meeting minutes on Thursday.

Sterling GBP= gained 0.35% to $1.2976.

British Prime Minister Boris Johnson and the head of the EU’s executive, Ursula von der Leyen, agreed in a phone call on Saturday to step up Brexit talks to close “significant gaps” barring a new trade partnership.

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Currency bid prices at 2:34PM (1834 GMT)

Description

RIC

Last

U.S. Close Previous Session

Pct Change

YTD Pct Change

High Bid

Low Bid

Euro/Dollar

EUR=

$1.1774

$1.1716

+0.50%

+5.03%

+1.1797

+1.1708

Dollar/Yen

JPY=

105.7100

105.3300

+0.36%

-2.89%

+105.7900

+105.3000

Euro/Yen

EURJPY=

124.45

123.39

+0.86%

+2.05%

+124.7000

+123.3700

Dollar/Swiss

CHF=

0.9159

0.9209

-0.54%

-5.36%

+0.9207

+0.9145

Sterling/Dollar

GBP=

1.2976

1.2931

+0.35%

-2.13%

+1.2990

+1.2901

Dollar/Canadian

CAD=

1.3278

1.3307

-0.22%

+2.25%

+1.3303

+1.3257

Australian/Dollar

AUD=

0.7174

0.7162

+0.17%

+2.18%

+0.7193

+0.7157

Euro/Swiss

EURCHF=

1.0784

1.0781

+0.03%

-0.63%

+1.0792

+1.0736

Euro/Sterling

EURGBP=

0.9073

0.9053

+0.22%

+7.32%

+0.9091

+0.9053

NZ Dollar/Dollar

NZD=

0.6632

0.6635

-0.05%

-1.54%

+0.6654

+0.6631

Dollar/Norway

NOK=

9.2327

9.3000

-0.72%

+5.18%

+9.3359

+9.1982

Euro/Norway

EURNOK=

10.8720

10.9200

-0.44%

+10.51%

+10.9392

+10.8470

Dollar/Sweden

SEK=

8.9050

8.9396

+0.24%

-4.73%

+8.9397

+8.8802

Euro/Sweden

EURSEK=

10.4848

10.4600

+0.24%

+0.15%

+10.4935

+10.4470

(Reporting By Karen Brettell; Editing by David Gregorio)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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