The US dollar weakened on Tuesday, reaching a one-week low against a basket of major currencies, as investors awaited the outcome of US fiscal stimulus talks as well as monitoring Brexit developments.
The White House and Democrats in the U.S. Congress reportedly came close to agreeing on a new coronavirus aid package on Tuesday when President Donald Trump said he was willing to accept a larger aid package despite opposition from his own Republican Party.
The stimulus is seen as a short-term downturn in the US dollar as spending will support the US economy and boost market sentiment, thus pushing investors into more risky assets.
Meanwhile, House Speaker Nancy Pelosi, who spoke to reporters after a luncheon with Treasury Secretary Steven Mnuchin, expressed his hope that an agreement would be reached later this week.
The euro led the way to a one-month high with trading higher in the Asian session after being supported by the weakness of the greenback dollar.
Moreover, the uncertainty in the Brexit issue limited the pound currency trading by only recording a modest increase against the US dollar. Investors are still looking for clues as to whether Britain will reach a trade agreement with the European Union by the end of this year.
As for commodity currencies, the Aussie dollar, the kiwi dollar and the Canadian dollar also showed gains in the Asian session, raised in the hope that an agreement in the US stimulus package would be reached.
