By Peter Nurse
Investing.com – The dollar remained near multi-year lows in early European trading on Tuesday, with little news to challenge a dominant narrative that sees loose U.S. policy to support a broad global recovery next year.
At 3:55 AM ET (0755 GMT), the Dollar Index, which tracks the dollar against a basket of six other currencies, was mostly flat at 90,688, after sinking to 90,419 on Monday, a level not seen since April 2018.
fell 0.1% to 104.06, decreased to 1.2140, trading close to a 2 1/2 year low of 1.2177 affected on Monday, while risk sensitivity fell 0.2% at 0.7523, after touching the most high since June 2018 at 0.7578 on Monday.
A new coronavirus stimulus to help sick businesses and homes is still struggling to get through Congress, but lawmakers are now talking about splitting the $ 908 billion stimulus bill into two parts, to theoretically make it easier to get through some of it.
The first part will include a $ 748 billion proposal that has bipartisan support including aid for vaccine distribution and unemployment benefits, and the other, more controversial, is a $ 160 billion bill for state and local support and temporary protection of liability Covid-19.
Congress releases on Friday, so time is limited.
The Federal Reserve begins its end of the year later on Tuesday, ending Wednesday, with rising expectations that the central bank will increase its bond purchase program as congressional dithers and Covid-19 cases increase, causing more blockages.
Additionally, “the Fed is annoying Steve Mnuchin’s decision to veto the extension of the emergency resources and this is perhaps the best reason to expect the Fed to add a stimulus via Twist operation despite several FOMC members acknowledging a brighter midterm perspective. “, said Nordic analyst Andreas Steno Larsen, in a research note.
Elsewhere, it rose 0.1% to 1.3331, retaining some strength after better than expected.
Additionally, European Union negotiator Michel Barnier said that sealing a trade pact with Britain is still possible after negotiations extended beyond Sunday’s self-imposed deadline to try to reach an agreement on Brexit.
If a trade agreement is not reached before the end of the year, free movement of goods, services, people and capital between the two zones will end abruptly, and may affect about $ 1 billion in annual trade.
“FX positioning data shows a considerable cut of online short GBP, but it does not reflect the shift to a more pessimistic market situation on Brexit. Even if some GBP shorts have been rebuilt in recent days, the position will hardly provide a buffer in the event of a disagreement. “, said Francesco Pesole of ING in a research note.
The Times of London reported that the two sides had made progress on the issue of an “equal rights field” regarding regulatory standards, leaving fishing rights as the biggest obstacle to a deal.