SYDNEY (Reuters) – The U.S. dollar struggled Monday to hold off a rare rally as its longest losing streak in a decade left many of the market structurally short of currency and vulnerable to a pressure on all current news.
FILE PHOTO: A US Dollar Banknote is seen in this illustration taken May 26, 2020. REUTERS / Dado Ruvic / Illustration / Stock Photo
Bears were caught up by a better report on payment transactions on Friday, which estimates Treasury yields higher in this massive $ 112 billion debt sale this week. However, the dollar ended even lower for the seventh week in a row.
“Our portfolio is now positioned for a number of weeks for a slightly weaker USD as a result of the independent increase of COVID-19 infections in the US, which opened a decent gap in long-term economic performance, especially against Europe, Analysts at JPMorgan said in a note.
“Our positions are concentrated in the EUR bloc, and also reflect the structural improvement in the European policy framework following the agreement on the recovery fund.”
The euro rose to $ 1.1791 on Monday after hitting a two-year high of $ 1.1915 last week, which now acts as a major resistance. Support comes in rounds of $ 1.1755 and $ 1.1694.
Turnover was light with Tokyo on holiday and much uncertainty over whether U.S. policymakers could agree to a new package of fiscal support for the virus-hit economy.
Chamber member Nancy Pelosi and Treasury Secretary Steven Mnuchin on Sunday said they were open to resuming COVID-19 aid talks after President Donald Trump took executive action on unemployment benefits.
Against a course of currency, the dollar was a fraction stronger at 93,339 and just above a two-year trough.
The dollar was slightly more stable on the yen at 105.75, well above the recent low of 104.17, but stood against stiff resistance at 106.46.
Investors were worried about a fresh rise in Sino-American tensions with trade talks scheduled for August 15, even as Washington imposed sanctions on senior Hong Kong and Chinese officials.
Any split in talks would favor the dollar, and the Swiss franc-safe haven, at the expense of the Japanese yen and commodity qualities such as the Australian dollar.
On the data front, the United States saw consumer prices on Wednesday and retail sales on Friday, which is expected to show a solid bounce in spending, although the latest round of social restrictions has taken some steam out of the economy.
A stream of Chinese figures is due this week, which is expected to show a sustained recovery, while EU production data are also expected to please.
Data showed China’s factory auction declined in July, driven by rising global oil prices and as industrial activity climbed to pre-coronavirus levels.
Report by Wayne Cole; Edited by Sam Holmes and Jane Wardell
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