US dollar rally fades as Biden is close to the election win
US dollar saw massive price movements against the basket of six major currencies amid nail-biting competition between the Democratic challenger Joe Biden and President Donald Trump.
Joe Biden has taken a big lead against the republican Donald Trump despite losing big swing states, according to the latest results. Joe Biden has won Michigan, Wisconsin, and Arizona, bringing the total electoral vote count to 264. The challenger only needs six more electoral votes to beat President Donald Trump.
US dollar rally fades on Biden victory
The market participants are anticipating that the US dollar is likely to feel pressure after election results because Joe Biden is likely to introduce stimulus packages for small and struggling businesses.
Stimulus packages would bring stability to the US economy and reduces investor’s focus towards safe-haven assets including the US dollar. Investors are likely to move towards riskier assets like equities because Biden is likely to bring stability to the global trade environment. This is evident from robust Wall Street gains in Wednesday trading.
“The moves in the yuan and the peso show that the market is trying to price in a Biden victory,” Mizuho Securities chief currency strategist Masafumi Yamamoto said.
“For slightly different reasons, we could also see the euro gain against the dollar,” Yamamoto added.
The USD index, which tracks the greenback against the basket of six major currencies, is currently trading around 93.36. The index has hit the 94.60 level on Wednesday amid a nail-biting competition in swing states.
Risker assets are rising
Gold recovered previous losses as the US dollar rally faded on Joe Biden’s lead. The yellow metal moved above the $1900 mark on Thursday. US equities also reported robust gains, with tech and pharma stocks are leading the rally. Euro and Chinese currency also stabilized against the US dollar. Analysts claim that the greenback will fall further once Biden reaches 270 electoral votes.