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The dollar settled near a three-week low on Monday amid optimism about the fiscal stimulus in the United States, while the yuan fell after the Chinese central bank changed its policy on currency reserves.
The dollar index stabilized after it witnessed the biggest loss in six weeks on Friday, when investors raised their bets that a financial stimulus package would be agreed to limit the repercussions of Covid-19 on the economy.
The Trump administration called on Congress to pass a reduced version of the bailout bill on Sunday, while negotiations continue on a broader package.
The dollar was hit by the stimulus negotiations, which stopped at times and resumed at other times. But with only three weeks left until the November 3 presidential election, investors are betting that Democrat Joe Biden is likely to win the US presidency and roll out a bigger economic package.
The dollar index scored 93.118, stabilizing during the day and almost abandoning the recovery it achieved at the end of September.
The euro fell 0.2% during the session to $ 1.1808. In Europe, the World Health Organization is urging governments to restrict activities to combat the rapid spread of Covid-19 infections.
The yen rose 0.1% against the dollar, to 105.520. The Swiss franc, which is considered a safe haven, was stable against the euro at 1.07630.
The highest risk New Zealand and Australian dollars fell by 0.2% during the session, after giving up the gains they made on Friday, when they rose to their highest levels in nearly three weeks.
The yuan fell after the People’s Bank of China said on Saturday it will lower the reserve requirement ratio for financial institutions when conducting some foreign exchange forwards trading to zero with effect from Monday.
Analysts say the move is aimed at curbing the yuan’s recent appreciation.
In internal trading, the yuan fell 0.3%. The yuan in overseas transactions was 6.7106 per dollar, down 0.3% during the session.
