The Euro rallied on Friday. What about other currencies?
The U.S. dollar traded at $1.1841 against a euro, after dropping by 0.87% in the previous session. The common currency has jumped sharply this week due to the dollar’s weakness. The Euro has also benefited from the news of the European Union nearing to a budget deal. The British pound stood at $1.3140, declining by 0.1% on Friday after gaining 1.23% on Thursday.
The onshore yuan plummeted down to 6.6386 per dollar. However, it remained close to its more than two-year high, which the yuan reached on Thursday.
Lots of traders think that a Biden administration will scale back Trump’s trade war with China. That should benefit the yuan.
The Australian dollar also tumbled down by against the dollar after the country’s central bank announced that it is prepared to expand bond purchases to support the economy if the need arises.
How did the U.S. dollar fare?
The dollar plunged to its lowest level in two months versus the basket of currencies on Friday. Vote counting for the U.S. election still continues, and traders expect more losses for the greenback.
Investors are betting that Democrat Joe Biden will win. However, they also think that Republicans will retain control of the Senate. That would make it difficult for the Democrats to pass the larger fiscal spending package though.
Thus far, Biden is leading, but a few important states are still counting votes. At the same time, Trump is mounting legal challenges to vote counts. As a result, there is still a high degree of uncertainty.
On Friday, the dollar index plummeted down to 92.447 against a basket of six major currencies, dropping to its lowest level since September 2.
Long-term Treasury yields collapsed due to expectations for less fiscal spending, while equities and other riskier assets rallied. That has placed the greenback under consistent selling pressure that will probably continue.
Marshall Gittler, the head of research at BDSwiss, stated that the mix of a Biden presidency and Republican control of the Senate seems deeply negative for the U.S. currency. He thinks that there will be less fiscal stimulus than would be the case under a ‘blue sweep’. However, that means most of the support for the United States’ economy will have to come through a looser monetary policy.
The dollar has already fallen further against the Japanese yen, changing hands at 103.45 yen on Friday, near to an eight-month low.
However, a strong yen is considered as a threat to Japan’s economy, and Japanese Prime Minister Yoshihide Suga has promised to work closely with other authorities to keep currency moves stable.
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