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Dollar slump continues on US economic worries

New York

THE safe-haven yen rose on Friday to its highest in more than four-months, while the dollar slumped to a near two-year low, as risk appetite waned due to a host of concerns including a continued rise in coronavirus cases, a delay in the US stimulus package bill and simmering US-China tensions.

The dollar posted its biggest weekly decline in almost four months against a basket of currencies and also saw its largest weekly percentage loss against a surging euro since late March.

"The first key thing is the Fed has knocked real rates down into negative territory, you have economic growth differentials turning against the US, so essentially the second wave of coronavirus infections is lowering activity across the states and is weighing on the likelihood of a rebound," said Karl Schamotta, chief market strategist at Cambridge Global Payments. "At the same time you have relatively positive signs elsewhere in the global economy."

The US Federal Reserve is scheduled to hold a two-day policy meeting this week.

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US coronavirus cases have passed the four million mark. The pandemic has killed more than 143,000 Americans and thrown tens of millions out of work.

Senate Majority Leader Mitch McConnell said on Thursday that US Senate Republicans will unveil their proposal this week for a new round of coronavirus aid, including more direct payments to Americans and a partial extension of enhanced unemployment benefits. He added that the administration has requested additional time to review the fine details of the proposal.

US unemployment benefits expire this week and without the extension of those benefits, millions of unemployed Americans would struggle massively. US House Speaker Nancy Pelosi said on Friday she was not considering a temporary extension to enhanced unemployment benefits.

Analysts said US-China tensions also undermined the dollar. REUTERS

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