After talks in Washington on the next round of fiscal stimulus collapsed, US President Donald Trump signed executive orders on Saturday, partially restoring improved unemployment payments to tens of millions of unemployed Americans.
“A little stimulus is simply better than none at all,” wrote Commerzbank analyst Thu Lan Nguyen.
“At least that’s how the market seems to see it, which is why the US dollar is trading moderately stronger,” she added.
Speculators have increased their net short positions in the dollar over the past week, according to weekly futures data on Friday.
The dollar index was at 93.5 by 07:30 GMT, up 0.1% on the day.
The euro was down 0.2% against the dollar to $ 1.17685, while the safe haven of the Swiss franc also slipped 0.2% against the US currency to 0.914.
The dollar had strengthened at the end of last week as tensions between the United States and China escalated, with the United States imposing sanctions on top officials in Hong Kong and China.
A prominent democracy activist, Hong Kong media mogul Jimmy Lai, was arrested on Monday under China’s new national security law, while U.S. health chief Alex Azar visited Taiwan on Sunday – a trip condemned by China which claims the island as its own.
Senior U.S. and Chinese officials will meet by teleconference on August 15 to review the implementation of their Phase 1 trade agreement and likely mutual grievances.
Overnight data showed that China’s industrial activity picked up in July, boosting hopes of an economic recovery and leading to early gains in European stocks.
The Norwegian krone gained against the dollar, up about 0.1% to 9.0430.
The New Zealand dollar fell 0.2% against the dollar to 0.6588.
The Australian dollar was moderate, down 0.1% against the US dollar at 0.71525, after the country recorded a record daily increase in deaths from COVID-19 on Monday. Prime Minister Scott Morrison said internal border closures are unlikely to be lifted until Christmas.
Australia’s central bank downgraded its outlook for the domestic economy on Friday and warned unemployment would remain high for several years.
Report by Elizabeth Howcroft; Montage by Kirsten Donovan
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