The US dollar erased its gains on Tuesday and deepened into negative territory after House Speaker Nancy Pelosi revealed that a coronavirus stimulus and relief package could be done by the dayâs end. This sent stocks and other asset classes rallying as investors were confident that the White House and the Democratic leadership could reach an agreement over a $2 trillion bill.
One day after telling President Donald Trump and his administration that they would have 48 hours to agree to a COVID-19 package before negotiations would end. But Pelosi and Treasury Secretary Steven Mnuchin have “continued to narrow their differences,” said Drew Hammill, the Speaker’s spokesperson. Pelosi later confirmed that both sides had made progress in talks, noting that it would be possible that they completed a deal by the end of Tuesday. This remark sent the leading benchmark indexes surging to session highs.
Pelosi and Mnuchin are scheduled to speak at 3 p.m.
For weeks, stimulus negotiations have been a thorn on the side of the broader financial markets. The primary provisions of the CARES Act expired at the end of July, resulting in slower job growth and some disappointing economic data. While House Democrats have put forward a $2.2 trillion spending bill, the White House and Republican leaders have countered with $1.8 to $1.9 trillion spending packages.
Meanwhile, President Trump has called off discussions only to restart talks. He stated that he would sign a bill that would give Americans direct $1,200 payments, but Pelosi did not bite.
Equities also received a boost after The Wall Street Journal reported that Modern CEO would allow the company’s coronavirus vaccine to be available for emergency use in December if it receives positive results from its interim trial next month.
On the data front, building permits climbed 5.2% in September, up from a 0.5% drop in August. Housing starts rose 1.9% last month, up from the 6.7% slide in the previous month.
Bond yields were in the green on Tuesday. The benchmark 10-year Treasury jumped 0.043% to 1.357%. The two-year note picked up 0.002% to 0.149%, while the 30-year bond advanced 0.049% to 1.597%.
The US Dollar Index, which gauges the greenback against a basket of currencies, plunged on the news after trading as high as 93.50. The index fell 0.4% to 93.05, from an opening of 93.42. Year-to-date, it is down nearly 3.5%.
The USD/CAD currency pair tumbled 0.62% to 1.3111, from an opening of 1.3192, at 17:26 GMT on Tuesday. The EUR/USD soared 0.54% to 1.1836, from an opening of 1.1770.
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US Dollar Erases Gains As Nancy Pelosi Says Stimulus Deal Possible by Dayâs End
