USD Holds Ground, More Losses Seen as U.S. Election Drags on

The dollar steadied against many currencies on Friday but traders say more losses are likely 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 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 against a basket of six major currencies stood at 92.641, close to a twoweek low.

For the week, the dollar index was down 1.5, 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.

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.

Theres 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 103.46 yen on Friday, close to an…

What's your reaction?

In Love
Not Sure

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *

More in:News