The dollar fell to its lowest level in more than two-and-a-half years on Thursday as signs of progress on US fiscal stimulus measures and positive news on COVID-19 kept investors upbeat.
Lawmakers in Washington have failed to reach agreement on an economic stimulus package to help mitigate the impact of COVID-19 in the US, but there are early signs that a $908 billion bipartisan proposal could gain traction.
House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell began talks Thursday for the first time since at least the 2020 election. Congress is trying to agree on a coronavirus stimulus package to prevent a government shutdown. Pelosi spokesman Tom Hamill said on Twitter that congressional leaders discussed their “shared commitment to complete a comprehensive spending bill and a New Cap relief program as soon as possible.” They have signalled they want to resolve both thorny issues before the last day of government funding, on December 11th.
The Trump administration on Thursday added China Semiconductor Manufacturing International (SMIC) and China National Offshore Oil Corporation (CNOOC) to its blacklist of so-called “military industrial enterprises of the Communist Party of China (CPC), Reuters reported, citing sources familiar with the matter and documents obtained. Reuters said the move could increase tensions with China ahead of the inauguration of US President-elect Joe Biden.
On Thursday, the Pentagon identified four other companies owned or controlled by the Chinese military, including China State Construction Technology Corp. and China International Engineering Consulting Co.
The potential move, first reported by Reuters on Sunday, brings the total number of blacklisted companies to 35. While the list initially drew no punishment, President Trump recently issued an executive order banning American investors from buying securities from blacklisted companies beginning at the end of next year.
On the situation between China and Australia, Ap news Agency, New Zealand, Australian Prime Minister Morrison said On December 3 local time that he hoped to engage constructively with China. A diplomatic spat between Australia and China over tweets appears to have finally cooled.
In a more conciliatory tone, Mr. Morrison told reporters in Canberra that his goal was for the two countries to “coexist happily,” the report said. “It is my position and my administration’s position to seek constructive engagement and to have a mutually beneficial relationship with China that is good for both of us,” he said.
In late U.S. trading, the dollar index.DXY was down 0.38 percent at 90.69, having hit a low of 90.51 and a high of 91.09.
Marc Chandler, chief market strategist at Bannockburn Global Forex in Bannockburn, New York, said that despite recent challenges such as a rise in COVID-19 cases and weaker Global economic data, “the market sees all the news as dollar negative.” .
He added: “Investors are looking beyond all this, a little bit further, they are seeing vaccines, they are seeing a world that can start to normalise.”
Gold prices rose on Thursday as the dollar fell and investors looked to a breakthrough in talks ona U.S. novel Coronavirus bailout.
Spot gold closed at $1,840.87 an ounce in late U.S. trading, up $10.43, or 0.57 percent, after touching as high as $1,843.87 an ounce and as low as $1,823.64.
Daniel Pavilonis, senior market strategist at RJO Futures in New York, said there could be more stimulus under Biden.
But in the end, he added, “the gold market is expecting a lot more stimulus than is currently being negotiated”, limiting the price’s upside.
The S&P 500 fell sharply late on Thursday, edging back from a record high after reports that Pfizer was cutting its plans for this year’s coronavirus vaccine launch because of supply chain problems.
Because of supply chain hurdles, Pfizer expects to ship only half of its original COVID-19 vaccine dose this year. After finding that some early batches of raw materials failed to meet standards, Pfizer said it expected to deliver 50 million doses of the vaccine globally by the end of the month, compared with its original plan of 100 million doses, but still expects to deliver more than 1 billion doses by 2021.
The Dow Jones closed up 85.70 points, or 0.29%, at 29,969.52. The S&P 500 closed down 2.30 points, or 0.06 percent, at 3,666.71. The Nasdaq Composite Index closed up 27.80 points, or 0.23%, at 12,377.18.
“Democratic leaders appear to have yielded to their insistence on a multitrillion-dollar fiscal stimulus package, increasing the likelihood of a deal by year-end,” Jan Hatzius, chief United States economist at Goldman Sachs, said in a report on Thursday.