28October, 2020No Comments|| 2
On Wednesday morning in Asia, the dollar was up despite investors avoiding big risks ahead of U.S. Presidential Elections on November 3.
The U.S. Dollar Index was up 0.22% to 93.127 by 10:05 PM ET (2:05 AM GMT).
Despite its gain, bearish sentiment for the dollar is growing as the election nears. Some investors were prepping for increased volatility in the market over the second wave of COVID-19 cases in Europe and the U.S. threatening economic growth, and the uncertainty over the election outcome so keeping investors on their toes.
“The COVID-19 spike is certainly a concern for France and southern Europe, so the euro’s upside is heavy … I don’t expect the dollar to gain much against elsewhere, because people have been overly complacent about how markets will react after the U.S. Election,” IG Securities senior foreign exchange strategist Junichi Ishikawa said on Reuters.
French President Emmanuel Marcon will give a televised address due later in the day but there are no details as to which areas the speech will cover. It is also expected that on Thursday, national lockdown will be re-imposed by the government.
U.S. Polls show that Democrat candidate Joe Biden is ahead of incumbent President Donald Trump, but memories of Trump’s surprise victory four years ago has some investors wary of predicting the election outcome. The possibility of a disputed election as legal battles between the two parties over how to count the votes already cast continue, will be negative for the dollar. The dollar received an additional blow after Trump admitted that it was unlikely that Congress would pass the latest stimulus measures before the election.
In the daily charts of GBP/USD, the pair edged higher at the nearing end of the Tokyo Session.
Investors are keeping an eye on the negotiations for a last-hour Brexit trade deal between the U.K. and the European Union, with the pound likely to be supported by increased hopes of a deal being reached between the two parties.
Although the pair is still trading inside the support and resistance levels, we can see a possible uptrend forming from the bounce at the support level last September. The uncertainty in the dollar further boosts the pound with increased hopes of a Brexit trade deal which is due on December.
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