Stimulus hopes press dollar to one-month low; yuan soars

Stimulus hopes press dollar to one-month low; yuan soars

21 Oct 2020 09:35 AM

The dollar hit a one-month low on Wednesday as investors who are optimistic about a pre-election U.S. stimulus package sought out riskier currencies, while the strong recovery in China's economy helped drive the yuan to a two-year high.

President Donald Trump has raised hopes for a stimulus breakthrough, saying he was willing to accept a large aid bill, despite opposition from his own Republican Party.

That sent U.S. 10-year Treasury yields to a four-month high, in anticipation of more government borrowing, and pressed the dollar index to its lowest level since September by boosting investors' mood. Doubts that any package can actually pass the Senate are keeping the dollar from breaching last month's two-year lows.

The dollar index was last down about 0.1% in Asia. The euro hit a one-month high of $1.1844.

The yuan has soared 7.6% on the dollar since May as China has led the global coronavirus recovery and its stock and bond markets have soaked up offshore capital flows.