FILE PHOTO: an employee counts US dollar bills in a currency exchange office in central Cairo, Egypt on March 20, 2019. REUTERS / Mohamed Abd El Ghany / File Photo
NEW YORK (Reuters) – The dollar gained Monday as investors waited for the U.S. fiscal stimulus to mitigate the impact of corporate arrests designed to stop the spread of coronavirus, even after the Federal Reserve took unprecedented steps. to support the loans.
In a series of actions, the Fed has agreed on historic measures that would see it for the first time supporting corporate bond purchases and direct loans to companies, expanding its business assets as necessary to stabilize financial markets and launching a program soon. to get credit for small and medium-sized businesses.
The dollar fell sharply when measures were announced, but gradually turned back as investors looked to the government for stimulus.
“The only thing we really need to see is that more tax ammunition will emerge,” said Mazen Issa, senior currency strategist at TD Securities in New York. “You have to think of those who are asked to be socially distant and to stay home from work and not to earn a salary and they are taking their time to make them whole. They must speed up.”
A far-reaching economic stimulus package of coronaviruses failed to advance to the United States Senate on Monday as Democrats said it contained too little money for hospitals and not enough restrictions on a fund to help big businesses.
The dollar index against a peer basket = USD fell to 101.64 on the announcement of new Fed support, before returning to trade at 101.53, up 0.03% on the day.
So far the multiple actions of the central bank have so far not been able to stem the strength of the dollar or compensate for the weakness of the shares.
U.S. currency gains were also fueled by a turnaround in dollar positions among hedge funds to a net short from an overall long bet, according to the latest positioning data. This sparked speculation that the dollar rally could be partly explained by the short hedging of traders.
Graph: World FX rates in 2019 here
Additional reports from Saikat Chatterjee in London; Editing by Marguerita Choy and Tom Brown