Dollar at two and a half year low, investors follow US stimulus negotiations

Dollar at two and a half year low, investors follow US stimulus negotiations

TOKYO (Reuters) - The dollar traded close to a two-and-a-half year low on Wednesday, as investors wary of talks on further measures to help the US economy. Risk currencies retained the advantage gained the day before amid rising risk appetite.

The dollar index against a basket of six major currencies fell 0.1% to 91.22 by 09:03 GMT, having reached its lowest since late April 2018 at 91.263.

Euro and "kiwi" stabilized after a jump to two and a half year peaks in the previous session amid a broad dollar decline. Euro traded at $ 1.207, while New Zealand dollar at $ 0.7065.

Treasury Secretary Stephen Mnuchin and House Speaker Nancy Pelosi negotiated new incentives for the first time since the election, while a bipartisan Senate and House of Representatives have proposed measures to tackle the $ 908 billion pandemic.

Pelosi said after the talks that Mnuchin will consider the proposals.

Senate Leader Mitch McConnell said Tuesday that Congress should include a new round of stimulus in the $ 1.4 trillion spending bill needed to avoid a government shutdown in the midst of a pandemic..

"The foreign exchange market is skeptical about whether these proposals could be quickly agreed upon, as hopes were already shattered once when the action plan was not adopted before the presidential election", - said Masafumi Yamamoto of Mizuho Securities.

"Traders watch closely for compelling evidence that an agreement has indeed been reached", - he said.

In addition, the safe dollar was weaker-than-expected from US manufacturing activity and speculation that the Fed will take steps to bolster the economy..

Fed Chairman Jerome Powell and Mnuchin urge Congress to provide more aid to small businesses amid increasing coronavirus pandemic.

The pound sterling was inactive at $ 1.3412, staying near a three-month peak.

"Australian" stabilized at $ 0.737.

Bitcoin fell 0.57% to $ 18,664.13, hitting a record high of nearly $ 20,000 the day before.

(Eimi Yamamitsu. Translated by Elizaveta Zhuravleva. Editor Marina Bobrova)