Dollar hurt by stimulus delay
Delays in the package and unveiling of the new bank bailout sends currency down slightly.
NEW YORK (CNNMoney.com) -- The dollar fell back Monday after two key elements of President Obama's economic revival plan faced delays.
The euro rose to $1.302, up 0.63% from $1.294 late Friday. The euro rose sharply against the dollar Friday after the Labor Department reported the U.S. economy shed nearly 600,000 jobs in January.
The pound also rose against the dollar, buying $1.492, up 0.87% from $1.479.
The dollar fell against the yen, at ¥91.46, down 0.44% from ¥91.86 late Friday.
Proponents of the economic stimulus package aimed to get the final votes in both the House and Senate before Congress begins its Presidents Day recess on Friday, but the Senate has yet to pass a preliminary vote on the bill.
Though Senate Majority Leader Harry Reid, D-Nev., attempted to get votes cast last week, the vote was delayed as a small bipartisan group of legislators tried to reach a deal on a compromise bill. A deal was reached late Friday, and a vote appeared likely Tuesday.
Meanwhile, President Obama held a town hall-style meeting in the economically hard-hit city of Elkhart, Ind., in order to drum up support for passage of the stimulus bill.
Another announcement got pushed back a day as well. To allow for more focus on the stimulus bill, Treasury Secretary Timothy Geithner said he will announce full details about the changes to the financial rescue plan on Tuesday - not Monday as originally planned.
"The markets reacted poorly to the delay of the fiscal package out of Congress," said Neil Mellor, currency strategist at Bank of New York Mellon in London. "Still, the dollar is likely to remain well-supported in these sort of markets."
Analysts say the dollar has room to grow, despite another enormous influx of government spending looming. The market has recently rewarded currencies whose governments are promoting policies that could lead to an economic recovery.
Last week, the pound rose sharply after the Bank of England cut interest rates to historic lows, but the euro fell after the European Central Bank elected not to cut rates. Under normal market conditions, traders usually sell off currencies whose central banks cut rates.
Mellor said continued anxiety about a prolonged economic decline will boost the dollar, as investors look to invest in the perceived safety of the "world's currency."
"We can't say with any real certainty that the worst has been accounted for," Mellor said. "Despite all the unprecedented measures that governments have taken, stocks are still down to their October lows."
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