A hand holds a series of fanned out U.S. dollar notes.
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The dollar was on the defensive at a one-week low on Thursday, as robust U.S. data and fresh hopes for U.S. fiscal stimulus had investors confident enough about economic recovery prospects to seek out riskier currencies.
Along with strong U.S. labor and manufacturing data, that helped stocks to rally and the mood pulled the dollar to a one-week low of 93.664 against a basket of currencies.
Mnuchin said later on Fox Business News that he would not accept the Democrats‘ proposed $2.2 trillion aid package, rather something closer to $1.5 trillion, adding that an agreement had been reached on direct payments to Americans.
“The two sides have come a long way,” said Westpac FX analyst Sean Callow.
“The rhetoric is reasonably conciliatory, I think we’re getting closer,” he said, adding an agreement would help the mood in equity markets and likely spill over into currency trade, boosting riskier currencies at the dollar’s expense.
At the same time, jobs figures that showed U.S. private employers stepped up hiring harder than forecast last month and that Midwest manufacturing grew faster than expected also fed in to the positive sentiment.
Chinese data on Wednesday had also shown the recovery on track in the world’s second-biggest economy.
The yuan edged up to a week-high 6.7804 in offshore trade on Thursday, though volumes are thin and the onshore market closed for holidays until October 9.
Nevertheless, firmness in the safe-haven Japanese yen indicated that plenty of underlying caution still remains. The yen held at 105.45 in Asia on Thursday, after climbing in the wake of a chaotic first U.S. presidential debate.
It ended its quarter since mid-2019 on Wednesday with a 2.4% gain over the three months to September 30 as some of the exuberance in risk assets wore off, particularly in September.
Final purchasing managers index figures are due in Europe and Britain later on Thursday, followed by the ISM manufacturing survey in the United States and jobless claims data – all providing an update on the progress of the global coronavirus recovery.
Speeches from Bank of England Chief Economist Andy Haldane, at 1020 GMT, and ECB Chief Economist Philip Lane, at 1545 GMT, will also be closely watched for hints as to the next monetary moves.