Left Menu
Development News Edition

FOREX-Dollar holds firm on COVID-19 woes and U.S. election uncertainty

I think the strategy this time is to travel light, and to choose the opportunity on the day rather than take on a very, very strong position going into the election." A week out from polling day, national polls give Democrat Joe Biden a solid lead but the contest is much tighter in battleground states that could decide the outcome.

Reuters | Washington DC | Updated: 27-10-2020 14:08 IST | Created: 27-10-2020 14:05 IST
FOREX-Dollar holds firm on COVID-19 woes and U.S. election uncertainty
Representative image Image Credit: ANI

The U.S. dollar clung to gains on Tuesday, but other safe-haven currencies were mostly quiet as investors sat on the sidelines ahead of next week's U.S. election, even as worries about a second wave of COVID-19 and economic impact rose.

Monday saw the steepest stock market sell-off in a month and a bond rally, but foreign exchange market activity has remained relatively muted, with price moves in early Tuesday limited. That said, analysts warned investors were clearly cautious after the United States, Russia and France all hit new daily records for coronavirus infections. They said prices were not moving much because of a reluctance to build positions in the run-up to the U.S. Presidential election on Nov. 3.

Euro-dollar was last at $1.18045, little changed on the day. The dollar index, which measures the greenback against a basket of currencies, edged slightly higher to 93.121.

The yen and the Swiss franc, both of which investors tend to flock towards when nervous, inched higher . "Many sources of uncertainty are still preventing clearer trends from emerging," UniCredit analysts said in a research note.

"The impasse on both U.S. budget talks and Brexit negotiations, as well as the implications of rising COVID-19 infections on 4Q20 GDP growth, play in favor of more euro-dollar and sterling-dollar stabilization for now," they said, pointing to levels of "just above $1.18 and $1.30, respectively." The usually risk-sensitive Australian and New Zealand dollars dipped only slightly overnight and were stronger in early European trading.

Sterling slipped overnight but was back above $1.30 on Tuesday at $1.3020. It was marginally lower versus the euro at 90.79 pence. National Australia Bank senior FX strategist Rodrigo Catril said many investors did not want to take on new positions before the U.S. election.

"I think many would probably remember the bad experiences we had going in to the Trump-Clinton election (in 2016)," said Catril. "If you had a position on, you would have been whipsawed big time. I think the strategy this time is to travel light, and to choose the opportunity on the day rather than take on a very, very strong position going into the election."

A week out from polling day, national polls give Democrat Joe Biden a solid lead but the contest is much tighter in battleground states that could decide the outcome. Analysts regard a Biden victory, and especially Democrat control of the Senate, as negative for the dollar since it is expected to deliver big stimulus spending that would boost investor sentiment and drive demand for riskier currencies.


TRENDING

OPINION / BLOG / INTERVIEW

Turbulence surrounding tobacco control in Ghana

... ...

Smart healthcare: IoT redefining the way healthcare is delivered

As the world is embracing the new wave of digitalization triggered by the pandemic and the arrival of 5G, the adoption of IoT devices will further boom. With adoption set to soar, IoT security issues and other challenges cant be ignored any...

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

Cash flow issues weighing down businesses during COVID-19 pandemic: ILO Survey

A new report on the impact of the COVID-19 pandemic on businesses shows that their greatest challenges have been insufficient cash flow to maintain staff and operations, supplier disruptions, and access to raw materials.With businesses alre...

'We are here for long haul': Farmers start gathering at Delhi's Burari Ground

Farmers, mostly from Punjab and Haryana on Saturday morning began arriving at the Nirankari Samagam Ground on the outskirts of the national capital for a protest against the new farm laws. After days of a standoff with police and after faci...

US imposes sanctions on Russian and Chinese companies for supporting Iranian missile programme

The US has imposed sanctions on four companies from China and Russia for supporting Irans missile program that remains a significant proliferation concern, Secretary of State Mike Pompeo has said. The announcement was made on Friday as the ...

Florida congressman-elect tests positive for virus

South Florida Congressman-elect Carlos Gimenez has tested positive for coronavirus, his campaign announced Friday. The former Miami-Dade County mayor and his wife, Lourdes, tested positive Thursday for COVID-19 after having mild symptoms, a...

Give Feedback