Riskier currencies maintain gains against the dollar in Biden’s election win

LONDON (Reuters) – The dollar stabilized on Monday after falling to a 10-week low following Joe Biden’s election as President of the United States along with the euro / dollar – the currency pair world’s most traded – standing below $ 1.19 with the Japanese yen remaining near an eight-month high.

Scandinavian currencies and the Australian dollar – all very sensitive to developments in international trade and investor risk appetite – were stronger.

Chinese yuan CNH = EBS was the biggest driver, hitting a 28-month high at 6.5501, and last trade up 0.6% to 6.5545.

The Norwegian krone was not to be outdone, advancing 0.5% against the dollar to 9.1135 NOK = D3, after peaking at seven weeks at 9.1020. The Swedish krona also rose 0.4% to 8.6160 SEK = D3, after hitting a 10-week high of 8.6100 previously.

“It’s a classic risk preference, asset risk, higher prices across the board – stocks, commodities – and it goes to the forex market,” said Neil Jones, European sales manager for hedge funds at Mizuho.

“The US dollar, as one would expect, is a safe haven currency and remains the world leader in terms of outperformance in times of risk aversion and so one might expect it to be on the back in risk-preference period, ”Jones said. .

The market can be a little reluctant to push the euro up, he added.

The Australian dollar rose 0.4% AUD = D3 at 0.7286 versus its US counterpart, after hitting 0.7301 earlier, its highest since September 21.

The euro was last traded at $ 1.1884 EUR = EBS, flat on the day, after hitting a two-month high of $ 1.1899 in the Asian session.

German exports rose more than expected in September, and foreign trade gave Europe’s largest economy a boost at the start of the fourth quarter as it struggles to avoid slipping into a double-dip contraction .

The US dollar earlier hit a 10-week low as investors announced Biden’s election victory by buying traded currencies believing a calmer White House could boost global trade and monetary policy will remain easy .

Biden crossed the threshold of 270 constituency votes required for victory on Saturday by winning the state of Pennsylvania. Republicans appear to have retained control of the Senate, although the final makeup may not be clear until the second round of voting in Georgia in January.

The US dollar changed hands to 103.5 Japanese yen JPY = EBS, up 0.2% on the day, although the yen was close to its strongest since March.

The US dollar index – which compares the greenback to a basket of currencies – was flat at 92.21, after falling to a 10-week low of 92.12 = USD. Sterling GBP = D3 reached its highest level in more than two months.

“The outcome (of the US election) is ideal from a market perspective,” said Michael McCarthy, chief strategist at CMC Markets in Sydney.

“Neither party controls Congress, so trade wars and tax increases are largely off the agenda.”

The prospect of a greater stalemate also means that expectations of a massive US fiscal stimulus package have been lowered, pushing bond yields down in anticipation of lower borrowing and deeper quantitative easing. from the Federal Reserve.

The sell-off of the U.S. dollar was held back by underlying viral concerns and because Donald Trump, the first incumbent to lose a re-election candidacy in 28 years, made no sign of giving in while waging legal battles for reverse the result.

Traders are also wary of further lockdowns as coronavirus cases rise, with the global number of infections surpassing 50 million on Sunday, with cases in the United States surpassing 10 million.

Europe’s fiscal and monetary responses to a second wave of coronavirus infections, which have already resulted in further restrictions on daily life, will be at the center of concerns when European Central Bank President Christine Lagarde takes charge. word Thursday.