The dollar clinched gains against most currencies Monday as fresh drops in stocks expedited the flight to cash. However, it lost ground against the euro and yen as U.S. legislators did not go a stimulus package to battle the coronavirus.
Legislators in Washington had been unable to clear the stimulus measures Sunday and a vote Monday was ruled out as Republicans and Democrats contended over the details of a drafted $1 trillion spending bundle.
Some investors who had bet on a big stimulus voiced their frustration by selling the greenback against the yen and the euro; however, analysts threaten this shift is likely short-lived as the vast majority of traders unwind positions to hold cash.
Against the yen, the U.S. currency rebounded between gains and losses; however, it last traded down 0.6% at 110.07.
The greenback initially soared against the euro to the strongest since April 2017; however, it then cut gains to trade 0.4% lower at $1.0742 per euro.
The common currency received a lift after European Central Bank Governing Council member Ignazio Visco stated legislators stand prepared to take steps if required in response to COVID-19, which has disrupted Italy’s economy.
The ECB surprised traders last week by launching a 750 billion euro emergency bond buy scheme.
The greenback shed gains and dropped 0.3% against the pound to $1.1694, withdrawing from the strongest since at least 1985.
Partisan battles in the Senate pause a $1 trillion-plus coronavirus response bill from advancing Sunday; however, negotiations continued over Democrats’ calls for more funding for medical care and state and local efforts to combat the pandemic.