17.08.202014:25 Forex Analysis & Reviews: US stimulus package agreement conflict drags dollar further down

The US dollar continues to depreciate in relation to most major currencies on Monday. The dollar's troubles are primarily related to the lack of agreement on the adoption of the next financial stimulus program from the US government. There is no way Democrats and Republicans can come to a consensus on the need for this stimulus package. Adding to the tension is the conflict between Washington and Beijing, which recently led to the disruption of negotiations between the countries over a trade agreement. A meeting of representatives of the two states was supposed to take place last weekend, which has now been postponed indefinitely.

The yen, on the other hand, became insignificant on Monday. It nevertheless, strengthened against the US dollar, however, went some pullback against the single euro. The poor statistics on Japan's economic growth in the second quarter of this year may be causing this negativity on the yen. According to the latest data, the decline in the country's GDP amounted to 7.8%, which was a record reduction against the background of a general decline in the indicator over the past three months. Thus, the Japanese economy still felt the weighty pressure of the coronavirus pandemic, which, according to analysts, will continue.

Meanwhile, the Chinese yuan is becoming more expensive in relation to the dollar. The US dollar fell 0.18% against the yuan to trade at 6.9379 yuan per dollar.

The People's Bank of China added some positive by making the decision to keep the base rate on loans at a low level of 2.95% for an indefinite period. In addition, the regulator made a financial injection into the banking system under the MLF program in the total amount of 700 billion yuan.

The value of the euro amounted to 1.1867 dollars per euro Monday morning, this is 0.21% higher than the previous figure. Recall that the trading session on Friday last week ended at $ 1.1842 per euro. In relation to the Japanese yen, the euro increased by 0.12% and reached 126.39 yen per euro. Its previous level was located at around 126.24 yen per euro.

The value of the US dollar against the yen has changed in the direction of reduction. The exchange rate fell by 0.08%, which moved it to the level of 106.52 yen per dollar, while earlier it was in the area of 106.60 yen per dollar.

The pound sterling has also strengthened in relation to the dollar growing 0.11%, which is equivalent to $ 1.3100 per pound. Recall that the previous trading ended at around 1.3086 dollars per sterling. The pound against the euro, on the contrary, reduced its positions by 0.12% and began to cost 1.1042 euros, while earlier it was at the level of 1.1055 euros per pound.

The dollar index against a basket of six major world currencies also continues to slowly but surely creep down declining 0.07% on Monday. It also sank 0.07% against a basket of sixteen major world currencies.

Today, the most popular strategy in the foreign exchange markets is associated with the sale of the US dollar, which is evidence of a total loss of interest in the greenback itself. Most analysts argue that the European economy is now in a stronger position and will be able to quickly recover from the crisis associated with the coronavirus pandemic. But the US economy, according to their calculations, will still face problems in the very near future. In this regard, it is very thoughtless to place a bet on the dollar, which is what the market participants listen to, among whom the bearish trend has spread in relation to the dollar.