FOREX-Dollar licks wounds as tight U.S. election dims quick stimulus hopes

Published 2020-11-05, 07:57 p/m
© Reuters.
EUR/USD
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USD/CHF
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* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

* Dollar falls broadly as yields fall, equities rally

* Currencies price in low chance of big U.S. stimulus

* Australian dollar falls after RBA statement

By Stanley White

TOKYO, Nov 6 (Reuters) - The dollar nursed losses against many currencies on Friday as a contentious U.S. presidential election diminished hopes for large stimulus to support the economy any time soon.

Investors are betting that Democrat Joe Biden will become the next president but Republicans will retain control of the Senate, which will make it difficult for the Democrats to pass the larger fiscal spending they have been pushing.

Biden maintains an edge over President Donald Trump, but a few important states are still counting votes and Trump is mounting legal challenges to vote counts, so there is still a high degree of uncertainty. large decline in long-term Treasury yields due to expectations for less fiscal spending, combined with a rally in equities and other risk assets, has placed the dollar under consistent selling pressure that is likely to continue.

"There is a green light for the resumption of dollar selling, reflecting past declines in real interest rates," said Ray Attrill, head of foreign exchange strategy at National Australia Bank in Sydney.

"There's an argument that the U.S. Federal Reserve will have to backstop risk assets. The pandemic is still trending in the wrong direction."

The dollar traded at 103.59 yen JPY=D3 in Asia on Friday, close to an eight-month low.

Against the euro EUR=EBS , the dollar traded at $1.1816 after falling 0.87% in the previous session.

The British pound GBP=D3 traded at $1.3131, holding onto a hefty 1.23% gain from Thursday.

The dollar index =USD against a basket of six major currencies stood at 92.654, close to a two-week low.

Investors also await the release of U.S. non-farm payrolls later on Friday, which is forecast to show a slight slowdown in job creation.

Worries about the U.S. economy are growing, which is a reason to expect declines in the dollar to continue into next year, according to some analysts.

In addition to the uncertainty about the presidential election, new coronavirus cases are rising to record levels in several states, which could curb U.S. economic activity. the Australian dollar AUD=D3 fell against the greenback in Asian trading after the country's central bank said it is prepared to expand bond purchases if needed to support the economy. declines in the Aussie also dragged the New Zealand dollar NZD=D3 lower.

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Currency bid prices at 9:35AM (0035 GMT) Description

RIC

Last

U.S. Close Pct Change

YTD Pct

High Bid

Low Bid

Previous

Change

Session

Euro/Dollar

EUR=EBS

$1.1816

$1.1828

-0.11%

+5.39%

+1.1848

+1.1809 Dollar/Yen

JPY=D3

103.5900

103.5500

-0.05%

-4.71%

+103.7000 +103.4950 Euro/Yen

EURJPY=

122.39

122.40

-0.01%

+0.36%

+122.6700 +122.3700 Dollar/Swiss

CHF=EBS

0.9045

0.9042

-0.03%

-6.59%

+0.9049

+0.9030 Sterling/Dollar GBP=D3

1.3131

1.3153

-0.15%

-0.98%

+1.3156

+1.3132 Dollar/Canadian CAD=D3

1.3068

1.3046

+0.11%

+0.54%

+1.3085

+1.3038 Aussie/Dollar

AUD=D3

0.7265

0.7285

-0.27%

+3.55%

+0.7283

+0.7255 NZ

NZD=D3

0.6762

0.6774

-0.15%

+0.52%

+0.6774

+0.6756 Dollar/Dollar

All spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX

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