No Consensus by Lawmakers on U.S Fiscal Package—Dollar Takes A Hit

As U.S lawmakers, the Republicans and the Democrats fail to reach a consensus on the way forward for an economic stimulus package, the dollar recorded losses against the major currencies.

On the other hand, European Union leaders have finally got their act together. Spearheaded by German Chancellor Angela Markel and Emmanuel Macron, President of France, the EU leaders have agreed to a 750 billion Euro stimulus package for the coronavirus hit economies. As a result, the Euro went at its highest level in more than a year as the dollar wobbled on the uncertainties in the U.S.

Shane Oliver, the chief economist at AMP Capital Investors in Sydney, explains,

As a result, the greenback went at $1.2727 against the British pound. It has fallen to 0.9323 for the Swiss franc, again a four-month low. AUD rose to $0.7144, the highest since April, while NZD closed at $0.6649, the highest since January. However, it has been intent at 106.79 on the yen.

The deadlock by the U.S lawmakers is not new. The House of Representatives had, two months ago, proposed a $3T relief package, which was ignored by the Republican-controlled Senate. Now, the Republicans are considering a $1 trillion package which the Democrats led by House Speaker Nancy Pelosi say is grossly inadequate.

Even as late as yesterday, there has been no clear understanding between the Republicans and the Democrats on the quantum of COVID-19 relief, especially for extending unemployment insurance to those retrenched during the ongoing pandemic.

There is hope that the dollar might soon get out of the trench it is in now. Investors are optimistic about U.S. home sales and jobless declarations.