By Gina Lee
Investing.com – The U.S. dollar was down on Wednesday morning in Asia over continuous investor worries over the U.S. economic recovery that capped the greenback’s gains. Investors are no longer able to count on higher returns from the dollar relative to other currencies, due to the question marks over U.S. economic growth.
Goldman Sachs (NYSE:GS) on Tuesday warned that a potential U.S. Federal Reserve shift “towards an inflationary bias” along with record high debt levels by the United States government are raising “real concerns around the longevity of the U.S. dollar as a reserve currency.”
The Fed is scheduled to convene later in the day and is widely expected to retain its dovish stance as the economy continues to be impacted by COViD-19. Four states reported record numbers of COVID-19 cases over a 24-hour period on Tuesday, with over 4.3 million cases reported nationwide as of July 29, according to Johns Hopkins University.
“Given the concerns about the second wave of infections, markets think the Federal Reserve is likely to take a dovish policy stance,” Yujiro Goto, chief FX strategist at Nomura Securities, told Reuters.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies was down 0.01% to 93.703 by 9:53 AM ET (2:53 AM GMT).
The dollar’s loss was gold's gain, with investors flocking to the safe-haven yellow metal and keeping gold futures at record-high levels.
The USD/JPY pair was up 0.04% to 105.12.
The AUD/USD pair gained 0.11% to 0.7165 while the NZD/USD pair slid 0.04% to 0.6658.
The USD/CNY pair gained 0.02% to 7.0011 and the GBP/USD pair gained 0.08% to 1.2920.
Meanwhile, Republicans and Democrats continue to wrestle over the latest COVID-19 stimulus measures, with some Republicans opposed to even their own party’s proposed $1 trillion proposal. Investors will be watching to see whether a consensus can be reached before some measures expire on Friday.