Left Menu
Development News Edition

FOREX-Dollar falls as likelihood of a Biden victory grows; yuan gains

Reuters/IPSOS polling this week put Biden, a Democrat, narrowly ahead of Republican President Donald Trump in five key states - Wisconsin, Pennsylvania, Michigan, Florida and Arizona. Rising expectations of a Biden victory has had a calming effect on market volatility and boosted appetite for currencies that have been hurt by the trade war between Washington and Beijing.

Reuters | Washington DC | Updated: 09-10-2020 17:48 IST | Created: 09-10-2020 17:29 IST
FOREX-Dollar falls as likelihood of a Biden victory grows; yuan gains
Representative image Image Credit: ANI

The dollar fell to its lowest in nearly three weeks on Friday and was headed for a second straight week of losses as expectations grew that Joe Biden would win the U.S. presidency and offer fiscal stimulus after the elections. Several Wall Street banks forecast a stimulus package no matter which candidate wins, but say that a Biden presidency, if Democrats also retake control of the Senate, would be likely to result in a bigger one. UBS Asset Management, for example, is assigning a 75% probability of a Biden win.

"Besides possibly losing the presidency, Republicans may also lose control of the Senate as betting odds are giving Democrats a near 70% chance of taking the Senate," Brown Brothers Harriman strategists said. Reuters/IPSOS polling this week put Biden, a Democrat, narrowly ahead of Republican President Donald Trump in five key states - Wisconsin, Pennsylvania, Michigan, Florida and Arizona.

Rising expectations of a Biden victory has had a calming effect on market volatility and boosted appetite for currencies that have been hurt by the trade war between Washington and Beijing. "There's been a noticeable decline in implied volatility around the election date, which suggests that the market is getting more confident of the outcome and that it's satisfied with the likely result," said Marshall Gittler, head of investment research at BDSwiss Group.

The dollar eased 0.3% against a basket of currencies at 93.30 and it is down 0.8% for the week. It fell by a similar margin last week. The dollar reached a two month-high at 94.75 in late September. The Chinese currency was the biggest beneficiary of the rising hopes of a Biden win. The yuan posted its biggest daily rise in more than four years, though the gains were partly catching up after a long break.

A stronger-than-expected setting of the yuan's trading band also signalled that policymakers in China don't mind its rise. Biden's lead in the polls are driving bets on a steadier Sino-U.S. relationship. The yuan was last up 1.2% at 6.7112 per dollar in onshore trade and up half a percent to 6.7024 per dollar offshore.

The risk-sensitive Australian dollar rose 0.2% to $0.7186, putting it a fraction higher for the week, despite analysts interpreting a Tuesday central bank statement as a signal of monetary easing to come. The yuan's gains had little impact on the euro and the pound, where concern over Brexit negotiations next week dominated sentiment.

The euro was up 0.1% to $1.1776. Sterling crept 0.2% higher to $1.2961 and has held firm this week as prospects for a Brexit deal appeared to improve.


TRENDING

OPINION / BLOG / INTERVIEW

Turbulence surrounding tobacco control in Ghana

... ...

Refugee compassion and response: Ideas to mitigate disasters now and in their future

Their homeland becomes a forbidden territory for them and more likely than not, their journey to foreign soil is no less traumatizing, not to say deadly. It is crucial to help refugees live a life of dignity and purpose....

Inadequate water infrastructure causes a tidal wave of coronavirus in rural Alaska

... ...

Videos

Latest News

Israel urges citizens to avoid Gulf, cites Iran threat

The Israeli government on Thursday urged its citizens to avoid travel to the Gulf states of the United Arab Emirates and Bahrain, citing threats of Iranian attacksThe travel advisory comes as Iran is threatening to attack Israeli targets fo...

Posters tagging TMC MLA Baishali Dalmiya as 'outsider' appear in her constituency

Amid the TMCs insider versus outsider campaign, party MLA Baishali Dalmiya on Thursday expressed reservations over branding of Union ministers coming to Bengal, even as sources said posters calling her an outsider have also been put up in h...

OPEC, Russia agree to nudge up oil output gradually from Jan

OPEC and a group of allied countries including Russia have agreed to increase their oil production by 500,000 barrels per day from JanuaryAlexander Novak, deputy prime minister of Russia, announced the decision on Thursday after long talks ...

J-K BJP expels 10 members for anti-party activities

The Jammu and Kashmir BJP on Thursday expelled 10 members for anti-party activities after eight of them contested the District Development Council DCC polls and the panchayat by-elections in the union territory against the partys official c...

Give Feedback