Dollar skids to fresh two-and-a-half-year low as US stimulus in focus

NEW YORK: The dollar sank to a fresh 2-1/2-year low in choppy trading on Wednesday, weighed down by expectations of further fiscal stimulus for the United States.
The greenback, however, last traded little changed to slightly lower on the day amid wrangling in Congress over additional coronavirus aid.
Republicans and Democrats in Congress remained unable to reach agreement on more relief for the U.S. economy on Wednesday, with top Republicans supporting what the Senate’s top Democrats dismissed as an “inadequate, partisan proposal.”
Treasury Secretary Steven Mnuchin said President Donald Trump supported a proposal put forth by Republican Majority Leader Mitch McConnell after the latter on Tuesday rejected a $908 billion bipartisan package.
For months, McConnell has pushed for a $500 billion plan that Democrats rejected as insufficient.
Democratic leaders, however, said on Wednesday a bipartisan coronavirus aid plan should be the basis for immediate negotiations in the U.S. Congress.
“Generally, the theme has been positive and the bipartisan plan gives us a base for further stimulus talks,” said Amo Sahota, executive director at currency advisory firm Klarity FX in San Francisco. “But quite honestly, I am not convinced by the stimulus plans. I think they’re still far away from a deal from what we can tell,” he added.
In afternoon trading, the dollar index was 0.1% lower at 91.115 , after earlier hitting 91.094, the lowest since late April 2018.
Wednesday’s data showing slower U.S. private hiring last month supported some safe-haven buying of the dollar earlier in the session.
Private payrolls increased by 307,000 jobs in November, the ADP National Employment Report showed, lower than economists’ forecast for a 410,000 rise. Data for October, though, was revised up to show 404,000 jobs added instead of the initially reported 365,000.
Analysts said the ADP report, while disappointing, had positive elements.
Adding to the positive risk sentiment was Britain’s approval of Pfizer Inc’s COVID-19 vaccine on Wednesday, jumping ahead of the rest of the world in the race to begin the most crucial mass inoculation program in history.
The euro, meanwhile, was up 0.2% at $1.2098, after earlier hitting $1.2108, the highest since late April 2018. The European Central Bank meets next week and analysts said the ECB could act to stem the currency’s rapid rise.
Against the yen, the dollar rose 0.2% to 104.52, after the Bank of Japan signaled its readiness to extend pandemic-response programs.