The dollar was down on Wednesday morning in Asia, with investors looking past a Senate delay in U.S. stimulus checks and continuing to bet that additional financial aid is still likely.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies slipped 0.24% to 89.713 by 9:03 PM ET (2:03 AM GMT), near its lowest level in more than two years.
The House of Representatives approved increasing the amount of the stimulus checks from $600 to $2,000 earlier in the week. With all eyes now on the Senate, Majority Leader Mitch McConnell moved on Tuesday to block the amount increase.
The greenback has seen steady losses ever since President Donald Trump signed a $2.3 trillion COVID-19 and spending bill on Sunday. Investors retreated from the dollar as the prospect of more U.S. stimulus reduced demand for safe-haven assets.
The last-minute infighting still did little to quench hopes of more fiscal stimulus measures, as the U.S. continues to see large numbers of COVID-19 that threatens the country’s economic recovery.
Although the size of the stimulus checks remains in question, some investors warned that the dollar is likely to continue falling in 2021 as they President-elect Joe Biden to roll out further stimulus measures. Biden and his administration are due to be sworn in on Jan. 20.
“Our weak dollar call remains intact as we move into 2021,” BBH analysts said in a note.
“What happens to the greenback … largely depends on how well the U.S. controls COVID-19 in 2021 as well as the outlook for further fiscal stimulus,” the note added.
Another factor dampening dollar sentiment is investors’ expectations that the Federal Reserve will maintain low interest rates for an extremely long period of time.
The USD/JPY pair edged down 0.19% to 103.36.
The AUD/USD pair was up 0.39% to 0.7635 and the NZD/USD pair gained 0.41% to 0.7177. The dollar’s loss was the two Antipodean currencies’ gain, as the pair are considered barometers of risk appetite due to their ties to global commodities.
The GBP/USD pair was up 0.28% to 1.3538.
Market moves are expected to be subdued, with low liquidity as many investors take their year-end holidays. A light data calendar for Asia as 2020 comes to an end also gives investors little incentive to take out big positions.