Dollar Down as Investors Eyes Biden for Presidency and Further Boosts Chinese Yuan
On Friday, the dollar drifted toward a small weekly loss, while the Chinese Yuan soared to a 17-month high, as investors wagered on a Joe Biden presidency on more U.S. stimulus spending.
The Yuan’s leap, when China’s markets reopened after the Mid-Autumn break, was partly a catch-up since the offshore yuan has gained against a softening dollar during this week.
But as it extended gains beyond 1%, its biggest daily jump in nearly two years, traders said it provided one of the clearest indications yet that Biden’s lead in the polls is driving bets on a steadier Sino-U.S. relationship.
A stronger-than-expected setting of the yuan’s trading band also signaled that policymakers in China don’t mind its rise.
The yuan was last up 1% at 6.7218 per dollar in onshore trade and it rallied half a percent to 6.7083 per dollar offshore. The dollar eased 0.1% against a basket of currencies and it is down 0.4% for the week.
“I think the main message is that the (People’s Bank of China) is allowing further renminbi appreciation at this level,” said Ken Cheung, chief Asian FX strategist at Mizuho Bank in Hong Kong. “So markets are positioning for a renminbi rally.”
The prospect of a Biden administration less inclined toward tariffs and trade disputes was another boost, he added.
“Polls are showing that Biden is taking the lead… it means the risks of resuming a new trade war are getting smaller, so I think this is positive for the renminbi.”
Reuters/IPSOS polling this week put Biden, a Democrat, narrowly ahead of Republican President Donald Trump in five states – Wisconsin, Pennsylvania, Michigan, Florida and Arizona – that will play critical roles in deciding the victor.
In the daily charts of GBP/USD, the sterling gained against the dollar early morning in Sydney Session.
The GBP/USD pair edged up 0.16% to 1.2954, holding firm throughout the week as investors continue to monitor the progress towards a Brexit divorce deal between the U.K. and European Union.
With the USD wounded due to the uncertainty of the U.S. Presidential Elections and the resurgence of Covid-19, other major currencies are gaining from these losses especially the Sterling.
The ongoing Brexit woes also boosts the sterling as of the moment but still uncertainty whether the pair is bullish or bearish is yet to be decided as the pair is still trading within the support and resistance level.
Don’t forget to follow and subscribe for more updates about market trends, analysis, forex news, strategies and more!
Do you want to learn more about forex trading? Sign up now on our FREE forex webinar and reserve your FREE seats while it still lasts!
Information on this page is solely for educational purposes only and is not in any way a recommendation to buy or sell certain assets. You should do your thorough research before investing in any type of asset. Learn to trade does not fully guarantee that this information is free from errors or misstatements. It also does not ensure that the information is completely timely. Investing in the Foreign Exchange Market involves a great deal of risk, resulting in the loss of a portion or your full investment. All risks, losses, and costs associated with investing, including total loss of principal and emotional distress, are your responsibility.
Due to COVID 19 outbreak, we have transitioned everything ONLINE. This is to make sure there is zero impact on your safety, security and still maximize your learning experiences with Learn to Trade.
You can close this pop-up to see all our online schedules.