The dollar sank to its lowest level in over two months against against a basket of peer currencies on Friday, as vote counting for the contentious U.S. election dragged on and investors predicted more losses for the currency.
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 package 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.
The dollar index fell against a basket of six major currencies to 92.447, hitting its lowest level since September 2.
Graphic Dollar falls to 2month low For the week, the dollar index was down 1.6, on course for its biggest drop in almost four months.
A large decline in longterm Treasury yields due to expectations for less fiscal spending, combined with a rally in equities and other riskier assets, has placed the dollar under consistent selling pressure that is likely to continue.
I do think the mix of a Biden presidency and Republican control of the Senate is deeply negative for the dollar, said Marshall Gittler, head of research at BDSwiss.
To sum it up, I think there will be less fiscal stimulus than would be the case under a blue sweep and therefore most of the support for the U.S. economy will…