6November, 2020No Comments|| 2
On Friday, the dollar steadied against most major currencies but traders are anticipating more losses on the coming days due to post-elections hopes are lessened for large stimulus to support the economy.
Investors are eyeing Biden as the next U.S. President but Republicans are still seeking to retain control of the senate which will make it difficult for the democrats to pass a large fiscal spending.
Joe Biden is still ahead in leads against President Donald Trump, but the counting is still ongoing and it is yet too early to decide who the victor is. The post-election uncertainty still affects the markets highly.
The dollar has been in a sell-off due to a large decline in long-term Treasury yields due to expectations for less fiscal spending.
“There is a green light for the resumption of dollar selling, reflecting past declines in real interest rates,” said Ray Attrill, head of foreign exchange at strategy at National Australia Bank in Sydney.
“There’s an argument that the U.S. Federal Reserve will have to backstop risk assets. The pandemic is still trending in the wrong direction.”
The dollar index was down 1.5%, on course for its biggest drop in almost four months.
During the Asian session, voting tallies from the U.S. states continued but the FX market reacted slowly because the declaration for the winner could still take a few days or weeks, some traders said.
Investors are also eyeing out the release of Non-farm payrolls due later Friday.
The rise in Covid-19 cases and worries on U.S. economic growth caused the dollar to dip lower which may also curb the U.S. economic activity. Expectations for the dollar to decline may continue until next year, some analysts say.
In the daily charts of GBP/USD, the pair edged lower early morning Friday on Sydney session.
The sterling edged higher against the dollar on Thursday as the Bank of England handed down its monetary policy. On Friday, the sterling gave back some of its gains but the dollar seems to steady once again in the Tokyo session.
The pair may breakout the resistance level at 1.31966 this weekend as the dollar weakens due to the uncertainty of the U.S. Presidential election and negative U.S. market outlook. Once the price breaks out from this resistance level, we may expect a strong upward pressure from the sterling next week.
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