TOKYO- The dollar licked wounds near a 2 1/2-year low against a basket of major currencies on Thursday as investors wagered that more economic stimulus from Washington and the expected start of COVID-19 vaccinations would support riskier assets.
Although Republicans and Democrats in US Congress remained unable to reach agreement on fresh relief for a pandemic-hit US economy, there were early signs that a $908 billion bipartisan proposal could be gaining traction.
Investors expect lawmakers to reach a deal eventually with the two parties also facing a Dec. 11 deadline to pass a $1.4 trillion budget or risk a shutdown of the government.
Britain on Wednesday approved a COVID-19 vaccine developed by Pfizer and BioNTech and said it would start vaccinating those most at risk early next week.
The optimism helped to boost the euro despite widespread expectations the European Central Bank will enhance its quantitative easing next week.
The common currency fetched $1.2113, having reached its loftiest level since late April 2018 in the previous day’s trade.
The dollar index slipped to 2 1/2-year low of 90.987 on Wednesday and last stood at 91.040.
“On the whole, the new US economic team under President Biden will be dovish, if not directly pursing a weaker dollar per se,” said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.