Stimulus deal moves closer; stocks cheer but dollar sags

The debate over the new stimulus package is again in the limelight. Congresswoman Nancy Pelosi promised that by the end of Tuesday the parties would make a final decision. Yesterday, the US dollar lost ground across the board as traders took a wait-and-see approach ahead of the next round of negotiation over the stimulus package. Many analysts cast doubt that Democrats and Republicans will reach a compromise before the presidential election. If so, the new relief package will not be forged until February. However, Nancy Pelosi set a Tuesday deadline for more progress with the White House on a fiscal stimulus deal. So, the US dollar index, which measures the strength of the greenback against a basket of six major currencies, slightly corrected upwards to the level of 93.40. Meanwhile, the stock market is gripped by a pessimistic mood. Wall Street closed in the red due to the lack of progress on the stimulus package. The dollar/yen pair is trying to rise to the resistance level at 105.78. If it breaks above this level, it may well lift up to the level of 106.23 and to 106.96. The Australian dollar is trading with a bearish bias. It broke below the support level of 0.7058. It is likely to decrease to the 0.6955 level as we forecast earlier. Traders opened short deals on the Aussie after the publication of the RBA Meeting Minutes. Market participants still remember RBA Governor Philip Lowe's hint made last Friday. He said that the regulator was ready to slash the interest rate to 0.10%. Minutes from the recent meeting showed that the Board discussed the scope of monetary easing to support jobs and the economy. Interestingly enough, the RBA officials admitted the possibility of reducing the key rate to zero. No wonder investors hurried to sell off the Australian currency.

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Forex News: 16/10/2020 - Wall Street storms back, but currencies don't play along.