The US dollar is likely to weaken further into the November election: Strategist
In addition, traders are awaiting the results of the next meeting of the Fed
The dollar continued to weaken on Thursday, posting its steepest three-day drop in more than three months, while traders await the results of the next meeting of the US Federal System..
Demand for the dollar as a safe haven waned as Democrat Joe Biden’s chances of winning the presidential election strengthened. Voting results are still unknown, as some states are still counting votes.
However, the Democratic Party did not live up to hopes in the congressional elections: by all accounts, the Senate will remain under the control of the Republicans, which will complicate the adoption of a large new economic aid package.
In the meantime, incumbent President Donald Trump has begun to challenge the counting of votes in several states, filing lawsuits and demanding a recount, which is also widely viewed as a negative factor for the dollar..
Against a basket of currencies, the dollar fell 0.5 percent to 92.93. This is the lowest level in more than a week.. Collectively, the dollar weakened 1.2 percent, the largest three-day drop since late July, according to Refinitiv..
The weakening of the dollar is also facilitated by the decline in the yield of US Treasury bonds. Spreads between 10-year and 2-year bonds tightened to their tightest level in more than three weeks.
With the final outcome of the U.S. election still unknown, the Fed is expected to renew its promise to do everything it can to help the economy weather the coronavirus-related downturn. The decision is expected at 19:00 GMT.
The most positive dynamics are shown by currencies, which in recent years have borne the brunt of Trump’s protectionist policies: the Chinese yuan briefly climbed to a two-year high against the dollar.
The euro surpassed $ 1.18, up 0.6 percent from the previous session, while some investors bet on Biden to win.
British pound climbs above $ 1.30 after central bank raises its bond buying plan.
The Norwegian krone is up more than 1 percent against the dollar after the central bank said it will support adaptive policies until the economy shows clear signs of recovery from the coronavirus pandemic.
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