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Dollar Up as Results from U.S. Elections Trickle In

Forex Nov 03, 2020 08:59PM ET
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By Gina Lee – The dollar was up on Wednesday morning in Asia, continuing its gains as polls close on election day in the U.S., with investors turning to the safe-haven asset as results from eastern states start coming in.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies was up 0.20% to 93.593 by 9:52 PM ET (1:52 AM GMT).

The economy and COVID-19 were the top two issues for voters, according to an Edison Research exit poll on Tuesday. The uncertainty continues as vote counting could go on for several days, delaying the outcome.

Currently, Democrat candidate Joe Biden has 85 electoral votes, leading over incumbent President Donald Trump’s 72 votes, according to Bloomberg. Trump won Indiana’s electoral votes, the first state to be decided, but the overall race is still too close to call and it could take several days for the results to be announce.

A Biden presidency is expected to pass big stimulus packages to support the COVID-19-hit economy, which is expected to boost riskier currencies such as the AUD and the NZD, although whether Biden is more successful in pushing those packages through Congress hinges on whether the Democrats win the Senate and the House of Representatives.

Biden is also expected to be less confrontational with China and other partners in trade issues, which will boost currencies in countries where Trump imposed tariffs, such as China’s yuan.

“It seems like many people are betting on a victory by Biden. It is a complete risk-on trade,” Daiwa Securities senior currency strategist Yukio Ishizuki told Reuters.

However, some investors warned that the closer the vote is to call, the higher the risk the election will be contested.

“A contested election probably takes all of the SPX, bond yields and the dollar, at least versus majors, down meaningfully,” Deutsche Bank (DE:DBKGn) chief international strategist Alan Ruskin told Reuters.

The USD/JPY pair edged up 0.13% to 104.59, with Japanese markets re-opening after a holiday.

TheAUD/USD pair edged down 0.15% to 0.7149 even after the Reserve Bank of Australia cut its interest rate to 0.10% from 0.25% and said that the board would buy AUD100 billion ($71.10 billion) of government bonds in its monetary policy, handed down on Tuesday.

The NZD/USD pair inched down 0.05% to 0.6694 and the USD/CNY pair was up 0.39% to 6.7016. Data released earlier in the day showed that October's Caixin Services Purchasing Managers Index (PMI) rose to 56.8, up from September's 54.8 figure.

The GBP/USD pair inched down 0.08% to 1.3047, with the U.K. and the European Union continuing Brexit trade talks.

The Federal Reserve and the Bank of England will hand down their respective monetary policies on Thursday.

Dollar Up as Results from U.S. Elections Trickle In

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