(Reuters) – A resurgent dollar held on to sharp gains on Tuesday after virus fears and worries over delays in fresh U.S. stimulus drove a wave of selling in just about every other asset market.
A public holiday in Japan kept moves in the Asia session modest and calmer trade in equity markets also took some of the pressure off riskier currencies.
Investors are looking to the London open for their next cues. U.S. Federal Reserve Chair Jerome Powell’s appearance with Treasury Secretary Steven Mnuchin at a congressional committee from 1430 GMT is also on the radar.
Against a basket of six major currencies =USD the dollar held at 93.519, just below a six-week high hit on Monday.
The Japanese yen JPY=, which fell from a six-month peak as greenback gains gathered pace, edged up to 104.57 per dollar.
The Australian dollar AUD=D3 recovered from a dip when a senior central banker mentioned negative rates as a policy option in a speech to trade steady at $0.7223.
“There was a flight to safety into the greenback and bonds from the sell off in equities,” strategists Philip Wee and Duncan Tan at Singapore’s DBS Bank said in a note.
“Sentiment will remain weak if (Powell and Mnuchin) fail to break the congressional deadlock to another round of fiscal stimulus.”
Stock market selling, which began in the financial sector after a fresh dirty-money scandal embarrassed global banks, started to moderate during Asian trade on Tuesday.
Futures painted a mixed picture, with tiny gains for Europe’s markets and small declines for those in the United States.
Oil exporters’ currencies such as the Norwegian krone NOK= and Canadian dollar CAD= were parked near multi-week lows as oil prices nursed steep Monday losses.
“A lot now depends on whether or not what we’ve seen in the last 24 hours is sustained,” said National Australia Bank’s head of FX, Ray Attrill.
“There’s good reason to think that we could be in for a multi-week period where the dollar at least stops declining.”
