Th e dollar rose on Friday from 2-1/2-year lows as doubts about an agreement on US COVID-19 aid and Brexit trade negotiations deflated investor confidence.
The US Congress looked increasingly unlikely on Friday to meet a deadline to agree on $900 billion in fresh CO VID-19 aid and instead may pass a third stopgap spending bill to keep the government from shutting down at midnight.
The European Union, also on Friday, said there were just hours left to strike a Brexit trade deal while Britain called on the bloc to see sense as the two sides race to prevent a turbulent finale to the Brexit crisis at the end of the month.
Brexit “is a major risk item that is not being resolved,” said Juan Perez, senior foreign exchange trader and strategist at Tempus Inc. “That ruins the whole global stability narrative and that helps the dollar,” Perez said.
The lack of a US stimulus resolution and mounting global CO VID-19 deaths are also fueling the flight to safe-haven assets, Perez said. The dollar index gained 0.21 percent to 90.0190, after dropping to 89.822 on Thursday.
Wall Street retreated from record highs on Friday as a coronavirus stimulus deal remained in focus ahead of a weekend deadline, while Tesla shares hit a lifetime high in anticipation of their addition to the S&P 500 next week.
As US stimulus talks dragged on, Democratic President-elect Joe Biden’s incoming chief economic adviser said on Friday a coronavirus relief plan under negotiation in Congress should not include a provision that would restrict the ability of the Treasury Department and the Federal Reserve to fight economic crises.