Dollar flat amid continuous US economic recovery uncertainty

WASHINGTON: The dollar was flat on Wednesday morning in Asia, with the safe-haven asset slowly recovering heavy losses from the previous session over the uncertainty surrounding the latest stimulus measures and, in turn, U.S. economic recovery from COVID-19.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies was flat, inching up 0.06% to 92.317 by 12:03 AM ET (5:03 AM GMT).
The ongoing impact from the U.S. Federal Reserve’s stimulus programs saw U.S. stock indexes soar to record highs and continues to put pressure on the dollar. The Fed’s intervention in the financial markets to increase liquidity also reduced demand for safe-have assets whilst increasing the appeal of risk assets, despite a bleak picture being painted for the U.S. economic recovery.
“There is a strong momentum for investors to want to sell the dollar,” Juntaro Morimoto, Sony (NYSE:SNE) Financial Holdings analyst, told Reuters, adding that the greenback has been declining since last month.
Consensus within the U.S. Congress for the latest stimulus measures also remains elusive, despite House Speaker Nancy Pelosi’s statement on Tuesday that Democrats would be willing to cut their bill “in half” to reach an agreement with Republicans.
The USD/JPY pair edged up 0.12% to 105.55. Japan said earlier in the day that exports fell 19.2% in July year-on-year, beating forecasts for a 21% drop prepared by Investing.com as well as the 26.2% drop seen in June. The data also showed that core machinery orders fell 7.6% month-on-month.
The AUD/USD pair inched down 0.05% to 0.7237 while the NZD/USD pair inched up 0.08% to 0.6604.
The USD/CNY pair inched up 0.01% to 6.9219, with U.S.-China tensions continuing to escalate. China reacted to the U.S. further restricting Huawei Technologies’ access to commercially available chips by denouncing the move as “nothing short of bullying” on Tuesday.
Meanwhile U.S. President Trump on Tuesday took responsibility for postponing trade talks between the two countries, originally scheduled for August 15.
The GBP/USD pair inched up 0.06% to 1.3243.
Investors are now looking to the release of the minutes from the Fed’s FOMC meeting, due later in the day.