Early trade in New York: Dollar index holds near 3-week lows; yuan drops

NEW YORK: The dollar index held near three-week lows on Monday as optimism over the possibility of a Covid-19 relief bill was curbed by concern over the pandemic while China's yuan fell after the People's Bank of China (PBOC) changed its reserve requirements policy.

The greenback has held within a range of about 2% over the past three weeks as talks have gone back and forth. The dollar had its biggest loss in six weeks on Friday amid rising hopes a fiscal stimulus package would be agreed to stem the economic fallout from Covid-19. More stimulus is seen as negative for the dollar.

The offshore yuan fell 0.8% against the dollar after China's central bank said on Saturday it would lower the reserve requirement ratio for financial institutions when conducting some foreign exchange forwards trading, a move seen as a bid to curb recent yuan appreciation.

The euro was down 0.15% to $1.1814.

The Japanese yen weakened 0.31% versus the greenback at 105.28 per dollar after Bank of Japan Governor Haruhiko Kuroda stressed his readiness to take additional monetary easing steps.

The pound held above $1.30, strengthening after Prime Minister Boris Johnson set out on Monday a three-tier system of local lockdown measures in England. Sterling was last trading at $1.3069, up 0.18% on the day.