Dollar nearly flat


    TOKYO- The US dollar treaded water against most major currencies on Thursday as US stimulus talks remained the focus for markets with trading buffeted over recent days by the extent of progress made on the potential size of the aid package.

    The dollar index was nearly flat against a basket of currencies at 92.792, having marked its lowest level since Sept. 2 overnight.

    On Wednesday, the dollar weakened to a seven-week low after US President Donald Trump and House Speaker Nancy Pelosi boosted hopes an agreement on stimulus was close, sparking demand for riskier assets.

    ”For a while, the pattern has been that when stimulus talks stalled, equities fell and the dollars were being bought due to risk-averse sentiment.

    But with optimistic headlines like these, the market is inclined to shift to risk-on mood and sell the dollars,” said Daisuke Karakama, chief market economist at Mizuho Bank.

    But prospects remain dim for the Republicancontrolled Senate to approve any aid before the Nov. 3 election, as President Trump accused Democrats of being unwilling to craft an acceptable compromise on stimulus.

    Separately, Federal Reserve Governor Lael Brainard said the biggest risk to her outlook for economic recovery was that fiscal support from the federal government would be withdrawn too soon.

    Analysts said the dollar was also pressured by a surge in currencies such as the sterling, which jumped to a six-week high overnight after Britain’s chief Brexit negotiator said talks with the European Union will resume on Thursday afternoon.

    In Asian trade, the pound’s uptick paused, down 0.15 percent at $1.3127.

    “We continue to believe it is in both EU and UK’s interests to strike a deal. Disruption to trade can affect Europe…and the resurgence of COVID-19 in Europe including within the UK could increase the need for a deal to avert further economic impact on both sides,” analysts at Maybank in Singapore wrote in a note.

    “Nonetheless, given the pace of the GBP rally recently, we are more cautious on whether further up-moves in the interim can gain traction without new positive developments,” they said.

    The euro edged 0.16 percent lower against the dollar to $1.8420, a fraction below a onemonth high of $1.8805 hit on Wednesday.