Doubts over US aid pro­posal send dol­lar slid­ing to two-year low

The Daily Telegraph - Business - - Business - By Tom Rees

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.

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