Greenback Down, as U.S. Election Lastly Delivers Biden Victory
By Gina Lee
Investing.com – The dollar was down on Monday morning in Asia, starting its week with losses as Democrat candidate was declared the winner of the U.S. presidential elections.
The , which tracks the greenback against a basket of other currencies, edged down 0.14% to 92.168 by 10:20 PM ET (2:20 AM GMT), barely above a ten-week low Investors retreated from the greenback over the expectation that a Biden administration would mean a steadier U.S. foreign policy and the continuation of a soft monetary policy, as announced by the Federal Reserve during the previous week.
“The dollar has weakened in anticipation of a Biden presidency bringing calmer politics … and anticipation of Fed coming to the rescue again amid near term risk of rising COVID infection,” Bank of Singapore FX analyst Moh Siong Sim told Reuters.
Biden won the state of Pennsylvania on Sunday, thereby obtaining the 270 electoral votes needed to win the election against incumbent president Donald Trump. However, Trump is refusing to concede and continuing legal action to contest the result.
Some trepidation remains because Donald Trump, the first incumbent president to lose a re-election bid in 28 years, has made no sign of conceding as his campaign has pressed on with legal fights against the outcome. Added to the uncertainty of which party holds the Senate majority, with four races yet to declare winners, some investors warned that it was too early to say whether market volatility has finally calmed down.
“We would caution that heightened volatility is not necessarily behind us, even though the election result is all but settled,” Commonwealth Bank of Australia (OTC:) currency analyst Kim Mundy said in a note.
However, some investors are betting on the Republicans retaining their majority in the Senate, boosting stocks but putting downward pressure on the greenback. Should their bets be correct, the divided Congress would create more work for the Federal Reserve as the Democrat agenda on taxes or regulations is thwarted.
“Republican control of the Senate is likely to see them dump the economic populism of President Trump and pursue a material decline in the U.S. fiscal deficit, which is set to underpin a large fiscal drag in 2021,” Perpetual head of investment strategy Matt Sherwood told Reuters.
“That means 2021 growth will now be more dependent on the U.S. Fed,” Sherwood added, as well as a COVID-19 vaccine, both of which would be negative for the dollar.
The pair inched down 0.01% to 103.31
The pair was up 0.37% to 0.7281 and the pair gained 0.53% to 0.6808. Although the Reserve Bank of New Zealand is widely expected to hold rates when it meets on Wednesday, the central bank is also expected to lay the groundwork to introduce negative rates in 2021.
The pair edged down 0.20% to 6.5950. The yuan rose to a 28-month peak over news of Biden’s victory, with investors hopeful of a more conciliatory approach to U.S.-China relations. China also released trade data, including October’s and year-on-year, as well as the , over the weekend. Further data, including the , is due tomorrow.
The pair edged up 0.20% to 1.3182. Bank of England Governor Andrew Bailey and chief economist Andy Haldane are due to speak later in the day, with the focus squarely on negative rates. Dallas Fed President Robert Kaplan is also due to speak later in the day.