Dollar Weakens Ahead of Stimulus Talks Federal Reserve

FxPremiere.com – FX Signal The dollar headed lower in early European trade Monday, as traders deserted the safe haven on hopes that Congress will finally agree a fiscal stimulus package ahead of the Federal Reserve’s policy meeting.

At 3:50 AM ET (0750 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.4% at 90.562, trading near a two-and-a-half year low.

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USD/JPY fell 0.1% to 103.98, EUR/USD rose 0.4% to 1.2155, while the risk-sensitive AUD/USD was up 0.4% at 0.7564, ahead of the release of the Reserve Bank of Australia‘s minutes from its latest policy meeting, due on Tuesday.

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A bipartisan bill for a $908 billion Covid-19 relief package is set to be introduced in Congress later in the day.

Dollar Weakens on Vaccine

Additionally, the U.S. Food and Drug Administration recommended approval on Friday of Pfizer ‘s (NYSE:PFE) Covid-19 vaccine for emergency use, paving the way for vaccinations to get underway in America this week.

FX Signals | Dollars bought as stimulus hopes

The Fed is an experienced communicator and we doubt it will make any mistakes over misconstrued words on premature removal of stimulus,” said ING analysts, in a research note.

Dollar Down Over Brexit, U.S. Stimulus Risks

Elsewhere, GBP/USD rose 1.2% to 1.3386, soaring after Britain and the European Union extended talks past Sunday’s self-imposed deadline in order to try and strike a Brexit trade deal.

If the extension of the negotiating time frame suggests increased political interest in avoiding that outcome. Forex Signals – Dollar set to extend decline

“We see an asymmetric GBP reaction function to the UK-EU trade negotiation outcome.

ING sees a deal as more likely than not, adding this should push GBP/USD above the 1.35 level, towards 1.37.

The Bank of England also holds a policy meeting later this week, but the central bank is not expected to move while the Brexit negotiations continue. It has already extended its QE program.by 150 billion pounds in November.

Dollar Weakens Ahead of Stimulus Talks Federal Reserve