By Chuck Mikolajczak
New York, Oct 12 (Reuters) – The dollar index was little changed near three-week lows on Monday as optimism over the possibility of a COVID-19 relief bill was curbed by concern over the pandemic, while China’s yuan fell after the People’s Bank of China (PBOC) changed its reserve requirements policy.
On Sunday, the Trump administration called on Congress to pass a stripped-down coronavirus relief bill using leftover funds from an expired small-business loan program, as negotiations on a broader package continue to run into roadblocks. A White House spokeswoman said on Monday that Senate Republicans will go along with what Trump wants in legislation.
The greenback has held within a range of about 2% over the past three weeks as talks have gone back and forth. The dollar had its biggest loss in six weeks on Friday amid rising hopes a fiscal stimulus package would be agreed to stem the economic fallout from COVID-19. More stimulus is seen as negative for the dollar.
“The dollar just retains this soft underbelly on expectations that sooner or later there will be some stimulus out of Washington,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington DC.
“At the same time, if you look at some of the election developments, the polls are trending in a way that is reducing worries about a contested outcome, that is more risk positive and therefore dollar negative.”
Opinion polls show Biden with a substantial lead nationally, but the advantage is smaller in some of the states that may decide the election outcome.
The offshore yuan CNHUSD=R fell 0.76% against the dollar after China’s central bank said on Saturday it would lower the reserve requirement ratio for financial institutions when conducting some foreign exchange forwards trading, a move seen