US Elections: USD continues to adjust lower in anticipation of Biden victory – MUFG

Democrat candidate Biden is still on course to become President and that is weighing on the US dollar, as Lee Hardman, Currency Analyst at MUFG Bank, notes. The dollar index has moved towards the bottom of its recent trading range between the 92.000 and 94.000-levels. 

Key quotes

“The final results of the US election have still not been called but market participants are increasingly confident that Joe Biden will become the next President. According to the latest Bloomberg report, he has strengthened his hold on the race. A win for Joe Biden in Pennsylvania which appears increasingly likely would be sufficient for him to become President.”

“In a sign of increasing desperation over the likely outcome of the election, President Trump’s team has been staging a legal fight with mixed results. The developments will heighten concerns as well that he will seek to undermine the incoming administration should he become a lame-duck president.” 

“It appears likely that the final outcome from the Senate race will be delayed until early in January. It appears likely that the two seats up for election in Georgia could both now go to run-offs which are expected to take place on the 5th January if Republican Senator Purdue fails to secure 50% of the vote. It would leave a small possibility open for the Democrats to secure a Blue Wave, although it is still judged as much more likely that the Republicans will retain control of the Senate resulting in a divided Congress. So far there have been few signs of disappointment from investors over the Democrats likely failure to secure control of both Houses apart from the sharp drop in long-term US yields reflecting the scaling back of fiscal stimulus optimism.”