Dollar jumps as US election race tightens; peso, yuan wilt

By: |
November 04, 2020 2:34 PM

President Donald Trump won in the key battleground states of Florida, Ohio and Texas, dashing market hopes for a clear result.

indian companies, foreign investment, jsw steel, ongc videsh, investment destinationUSA, Singapore, Netherlands, British Virgin Islands, and Mauritius were the favourite investment destinations of the Indian firms.

The U.S. dollar jumped and riskier currencies wilted on Wednesday as early results in the presidential election showed a tight race, surprising currency investors who had been betting on a decisive victory for Democrat Joe Biden.

President Donald Trump won in the key battleground states of Florida, Ohio and Texas, dashing market hopes for a clear result. Investors waited to see whether Trump would retain the Rust Belt states — Michigan, Wisconsin and Pennsylvania — that sent him to the White House in 2016.

The dollar was up 1% as European markets opened, while the offshore-traded yuan, Australian dollar and Norwegian crown, which have for years borne the brunt of Trump’s protectionist policies, weakened.

“One of the few things clear so far is that we are not going to see a Democrat landslide win as polls had suggested. That has wrong-footed an FX market which was positioned for some clarity,” said Chris Turner, global head of markets at ING.

At 0718 GMT, the dollar was up around 1% against a basket of currencies, having earlier hit its highest level in more than a month. The dollar had fallen to a one-week low on Tuesaday on expectations of a win for Biden.

“We saw the dollar come under pressure going into the election and we are now seeing an unwind of that,” said Salman Ahmed, head of macro and strategic allocation at Fidelity International
While victory for Biden was seen boosting prospects for a large U.S. fiscal aid package, it was also expected to lessen the trade war tensions which have supported the greenback.

The euro fell 0.7% at $1.1637 to the lowest in more than three months while sterling tumbled 1%
The rising likelihood of a Trump re-election hurt currencies that have been hardest hit by his trade policies, such as the Mexican peso and the yuan, which weakened by more than 3% and 0.7% respectively.

President Donald Trump falsely claimed that he had won the election, with millions of votes still uncounted. His rival, Biden, said he was confident of winning a contest that will not be resolved until a handful of states complete vote-counting over the next hours or days.

Overnight volatility gauges for euro-dollar and dollar-yen fell however, as investors waited for clarity. They had surged to their highest levels since March earlier this week .

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