TOKYO- The dollar held overnight gains on Tuesday following seven weeks of an almost relentless fall as investors clung to hopes of a bi-partisan stimulus deal in Washington and US bond yields rebounded from multi-month lows.
The dollar index jumped back to 93.597 from Friday’s two-year low of 92.495. Having fallen for seven straight weeks, the currency was due for a short-term corrective bounce, traders said.
The euro changed hands at $1.1741 having eased 0.5 percent in previous trade. The dollar stood little changed at 105.96 yen.
“The dollar’s decline appears to have come to a halt for now. Although talks on fiscal spending are locked in a stalemate, we are at least avoiding a complete cutoff of extra jobless benefit,” said Minori Uchida, chief currency analyst at MUFG Bank.
US President Donald Trump on Saturday signed executive orders restoring part of enhanced unemployment payments and suspending payroll taxes.
“Compared to market consensus of a stimulus deal worth $1 trillion-$1.5 trillion, economic boosts from the announced measures would be clearly smaller,” said Takafumi Yamawaki, head of Japan rates and FX research at JPMorgan.
“Looking at market reactions, investors appear to think that there will be some sort of deal eventually,” JPMorgan’s Yamawaki.