Doubts over US aid proposal send dollar sliding to two-year low
THE dollar slumped to a two-year low and gold prices hit record highs amid fears that a new $1 trillion aid proposal in the US will fail to mitigate the economic damage caused by rising Covid-19 infections.
The latest slide in the dollar came as the Trump administration prepared to unveil a new economic aid package that seeks to scale back generous jobless benefits, with laid-off workers receiving 70pc of their wages. White
House officials said another $1,200 (£932) stimulus cheque and a plan to wean workers off a $600 weekly boost to unemployment benefits were part of the package being finalised in talks with Republicans. The proposal was due to be revealed by Senate Republicans yesterday evening but is only the first move in attempts to win the backing of the Democrats, who control the House of Representatives.
Steven Mnuchin, the US treasury secretary, said the temporary unemployment benefits would be replaced by a scheme covering 70pc of pre-pandemic wages for workers who have lost their jobs.
However, hopes of a new stimulus package could not stop another dollar tumble as investors sought the safety of gold amid signs the second wave of infections is damaging the world’s largest economy. States have reimposed restrictions and claims for unemployment benefits are on the rise again as Covid-19 cases jump.
Gold prices extended their rally to hit a new all-time peak of $1,945 per ounce and sterling jumped to its highest level against the dollar since the pandemic struck. The pound neared $1.29 against the greenback as the dollar hit a two-year low compared with a basket of currencies.
The current relief package in the US officially expires on Friday and Republicans have voiced concerns of the costly jobless benefits incentivising Americans to avoid looking for work.
While unemployment has fallen back to 11pc, many economists fear a second wave of job losses.