SYDNEY (Reuters) – The dollar hit a 10-week low on Monday as investors heralded Joe Biden’s US Presidential election by buying commercial currencies in anticipation that the House Calmer White could boost world trade and monetary policy would remain easy.
Chinese Yuan CNY = hit a 28-month high, New Zealand dollars NZD = D3 reached 19-month highs and Australian dollars AUD = D3 hit a seven-week high as the dollar index fell to its lowest level since early September = USD. Korea won KRW = hit a 21-month high of 1,115.33 per dollar. GBP = D3 reached the highest level in more than two months while the euro EUR = 0.1% increase, extending a gain of nearly 2% from the previous week to reach a two-month high of $ 1.1895.
Biden crossed the 270 electoral college votes needed to win on Saturday when he won in Pennsylvania. Republicans appear to remain in control of the Senate, although the final outcome may not be clear until Georgia’s voting in January.
“The results are ideal from a market point of view,” said Michael McCarthy, chief strategist at CMC Markets in Sydney. “Neither side controls Congress, so both a trade war and higher taxes are largely off the agenda.”
The prospect of a more deadlock also means that expectations for a major US fiscal stimulus have been lowered, leading to a sharp drop in bond yields on predictions that the US Federal Reserve will borrow less and loosen. more quantitative.
The broad weak dollar had the yen JPY = a stronger gain against the US dollar and just below Friday’s eight-month peak of 103.18 yen per dollar, while lower US bond yields also made the Treasury less attractive to the with extraordinary buyers in Japan. [US/]
The yuan, particularly sensitive to the election results because of the perception that Biden will take a softer or more predictable stance towards China, has also been driven by strong Chinese trade data. on the weekend up at 6.5826 per dollar.
Westpac analyst Sean Callow said: “A weak dollar is probably going to have a bit of a way to run under Fed conditions and also ease trade tensions as something positive. with other currencies.
Bigger moves were tested on Monday as the currency markets largely reacted to Biden’s win on Friday and because Donald Trump, the first incumbent to lose reelection in 28 years, failed signs of concessions.
Commonwealth Bank of Australia currency analyst Kim Mundy said: “We would warn that strong volatility is not necessarily behind us, even though the election results are already settled.”
The President, who spent months trying to undermine the election results with unproven allegations of fraud, on Saturday pledged to continue with a legal strategy he hopes to overturn. The cantonal fruit brought Biden the victory.
Traders are also wary as cases of coronavirus infections increase, with the global total numbering 50 million on Sunday as cases in the United States surpass 10 million – sparking worries about many. lockout service over.
Late Monday saw the arrival of Bank of England Governor Andrew Bailey and chief economist Andy Haldane at 10:35 GMT and 1400 GMT, where negative exchange rates were discussed. Dallas Fed President Robert Kaplan speaks at 22:00 GMT.
On Wednesday, the Reserve Bank of New Zealand met, expecting to keep interest rates but set the framework for going negative next year.
In emerging markets, the Turkish lira is devalued TRYTOM = D3 rose as much as 2% after the overthrow of the central bank’s chief and Turkish finance minister’s resignation over the weekend.
The lira fell 30% to a record low this year amid a coronavirus pandemic as investors worried about a decline in foreign reserves and double-digit inflation.
Graphics: World foreign exchange rate 2020 here
Report by Tom Westbrook; Edited by Ana Nicolaci da Costa