SINGAPORE- The dollar was on the defensive at a one-week low on Thursday, as robust US data and fresh hopes for US fiscal stimulus had investors confident enough about economic recovery prospects to seek out riskier currencies.
US Treasury Secretary Steven Mnuchin told reporters that talks with House Speaker Nancy Pelosi “made a lot of progress” on long-awaited COVID-19 relief legislation.
Along with strong US labor and manufacturing data, that helped stocks to rally and the mood pulled the dollar to a one-week low of 93.664 against a basket of currencies.
Early in the Asia session the New Zealand dollar extended gains to a one-week peak of $0.6623. The Aussie rose 0.1 percent to $0.7170, a fraction below a one-week top of $0.7175 made overnight.
Mnuchin said later on Fox Business News that he would not accept the Democrats’ proposed $2.2 trillion aid package, rather something closer to $1.5 trillion, adding that an agreement had been reached on direct payments to Americans.
“The two sides have come a long way,” said Westpac FX analyst Sean Callow.
“The rhetoric is reasonably conciliatory, I think we’re getting closer,” he said, adding an agreement would help the mood in equity markets and likely spill over into currency trade, boosting riskier currencies at the dollar’s expense.