By Ritvik Carvalho
LONDON, Oct 8 (Reuters) – The dollar and safe-haven Japanese yen nursed losses on Thursday, after revived hopes for U.S. fiscal stimulus improved investor sentiment, while the prospect of negative interest rates knocked the New Zealand dollar lower.
President Donald Trump and House Speaker Nancy Pelosi seem open to pursuing a stimulus package for the airline industry, even though Trump halted talks with Democrats for a bigger plan.
Investors also expect Joe Biden, if elected, would quickly spend money to stimulate growth.
That mood has lifted equity markets and sunk the yen JPY= to a three-week low of 106.11. The dollar struggled to recoup losses against other majors, excluding the kiwi.
Against a basket of currencies, the dollar was down 0.1% on the day. =USD
The euro EUR= edged up to $1.1782. The risk-sensitive Australian dollar AUD=D3 rose 0.3% to $0.7163. AUD/
“Overall, investors seem to be focusing more on the increasing odds of a Biden win and what that might imply for a stimulus package after the election,” said Marshall Gittler, head of investment research at BDSwiss.
“With that eventuality in mind, Trump’s decision to stop negotiations now is ultimately a risk-on move, as it increases the likelihood of a decisive Biden win.”
The New Zealand dollar NZD= was the biggest loser among G10 currencies, dropping as much as half a percent after central bank officials again hinted that negative interest rates are possible. It recovered in early deals in London to trade 0.1% higher to the dollar on the day.
Money-market pricing of an April 2021 rate cut increased after the remarks and the kiwi slipped to a three-week low against the Aussie AUDNZD=, before paring losses a little. It was last down 0.2% against the dollar at $0.6570.
“Today’s rhetoric from the