US dollar slumped on vaccine discovery, Biden win
US dollar fell sharply after democrat’s Joe Biden announced electoral victory against President Donald Trump. The selloff accelerated in Monday trading as Pfizer announced that their coronavirus vaccine is more than 90% effective.
Joe Biden win has supported risker assets and currencies as traders believe Biden would bring stability to the global trade environment. The higher level of certainty always supports risker assets and lower traders focus towards safe-haven assets. Equities have reported massive gains in the past couple of days amid Joe Biden’s election win.
US dollar fell to 10 week low
The USD index, which tracks the US dollar against the basket of six currencies, slipped to the lowest level in ten weeks on Monday before reversing some losses on Tuesday.
The improvement in the global business environment would improve the trader’s focus towards stock markets and risker currencies in the days ahead, according to analysts.
“Although premature to solidify expectations of a widely available vaccine in the coming months, (the news) helped boost global growth expectations which took a substantial knock only weeks ago with second wave concerns,” currency analyst at broker Monex Europe Simon Harvey said.
Meanwhile, risker currencies have hit multi months high against the greenback. The Chinese yuan jumped to the highest level in the past 28-months while the New Zealand dollar hit a 19-month high and the Australian currency soared to a seven-week high against the US dollar.
The stimulus package and stability support the bearish trend
Joe Biden has promised to introduce several stimulus packages for American people and businesses to help the economic recovery. Market participants believe the stronger inflow of US dollars into the economy would negatively impact the value of the currency.
Investors also claim that Biden will reverse Donald trump’s unfair and strict trade policies to bring stability to the global trade environment.