The US dollar gained against a basket of currencies on Wednesday after Democrats seemed unlikely to take control of the US Senate, leading investors to unwind bets on the likelihood of a big budget package
Democrat Joe Biden held a narrow lead in Wisconsin on Wednesday after officials completed their vote count in the pivotal state, a major boost in his quest to win Donald Trump’s US presidency
A so-called ‘blue wave’ of votes for Democrats has not emerged as many had expected, making it likely that Republicans will retain control of the US Senate and oppose any massive increase in stimulus spending
« It will be very difficult to get further stimulus if we have a Republican Senate, » said Bipan Rai, North American head of foreign exchange strategy at CIBC Capital Markets in Toronto. « If that’s the case, I think some of these ‘blue wave’ trades need to be unwound. Now what that means for the dollar is that we’re probably looking for a short push »
The offshore yuan hit a more than two-year high of 66,190 against the dollar on Wednesday afternoon as Biden appeared to take the lead The yuan had weakened to a one-month low of 67741 in day to day trading
The exceptionally intense trading on Tuesday night between the dollar and the yuan generated volumes in global markets, said Troy Rohrbaugh, global head of markets at JPMorgan Chase & Co
Currency volume in Asia was three to four times the daily average, he said « China is one of the main political issues that will be determined by the elections, » Rohbraugh said
The yuan has been heavily affected by Sino-US disputes since the start of the bilateral trade war in 2018
The prospect of legal challenges over the election result, however, could further dampen risk-taking in the days or weeks to come, which would likely push the greenback further.
« The disputed election result and this referral to court is what I think not everyone wants, » said Edward Moya, senior market analyst at OANDA in New York. don’t have this certainty, you will eventually see that risk aversion will persist as we saw in 2000 «
Trump’s campaign said on Wednesday it would call for a recount of the votes in Wisconsin, hours before CNN and the Associated Press predict Biden had won all 10 votes from field state constituencies key battle
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Foreign exchange market, US presidential election, 2020, Joe Biden, dollar
World news – UK – Dollar wins as investors relax bets on significant budgetary expenditure
