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Dollar Up, With Biden Edging Closer to Victory in U.S. Election

ForexNov 04, 2020 09:22PM ET
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© Reuters.

By Gina Lee

Investing.com – The dollar was up on Thursday morning in Asia, avoiding big moves as markets await the outcome of a nail-biting U.S. presidential election.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.05% to 93.490 by 10:12 PM ET (2:12 AM GMT).

Democrat candidate Joe Biden has 264 of the 270 electoral votes needed to declare victory, compared to incumbent President Donald Trump’s 214, according to Bloomberg, claiming victory in the states of Wisconsin and Michigan earlier in the day. The election now hangs on the vote count from a few remaining swing states, and Trump is already pursuing lawsuits and a recount in Pennsylvania and Michigan. The uncertainty could negatively impact the dollar in the short run, some investors warned.

Even if Biden were to overcome the challenge posed by Trump and become the next president, the failure to achieve a Democrat sweep of the Senate and House of Representatives could hamper his fiscal agenda for big stimulus packages to aid the COVID-19-hit economy and pose an additional challenge to investors.

A Biden administration could also give a boost to some currencies, such as the Mexican peso, that suffered under the tariffs imposed by the Trump administration at the expense of the dollar. Biden is widely expected to take a softer tone on trade policy than Trump. The peso steadied from Wednesday’s 0.9% gain earlier in the day.

“The moves in the yuan and the peso show that the market is trying to price in a Biden victory,” Mizuho Securities chief currency strategist Masafumi Yamamoto told Reuters.

“For slightly different reasons, we could also see the euro gain against the dollar,” Yamamoto added. The euro steadied from the previous session on Thursday.

The USD/JPY pair edged down 0.15% to 104.33.

The AUD/USD was down 0.26% to 0.7154 and the NZD/USD pair inched down 0.09% to 0.6688.

The USD/CNY pair edged up 0.11% to 6.6556. Investors are keeping an eye on whether the onshore yuan would gain against the dollar, with the yuan seeing a brisk trade as a bet on a Biden victory.

The GBP/USD pair was down 0.28% to 1.2948. The pound saw losses over news that the Bank of England, due to announce its monetary policy later in the day, is considering negative interest rates.

The Federal Reserve will also hand down its monetary policy later in the day, which is widely expected to remain the same.

Dollar Up, With Biden Edging Closer to Victory in U.S. Election
 

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