US Dollar Weakens to Lowest Level in 2 Years Amid Prospect of Biden Win
As the official results of the US election have yet to be determined amid a torrent of chaos and alleged election irregularities, the US dollar fell for the third consecutive day, to the lowest level not seen in over two years.
Following Donald Trump’s announcement on suing states over supposed election inconsistencies, the dollar index, which measures the US dollar against a basket of various other currencies, fell by 0.8% on Thursday before slightly recovering its losses. The greenback also depreciated against the yen and the British pound by about 0.2%, as well as the Canadian, New Zealand, and Australian dollars.
The US dollar drop came after Biden inched 6 electoral votes away from the 270 needed to claim the White House, after winning across several important battleground states. President Trump, who initially held a lead in those states, has already filed lawsuits in Georgia, Pennsylvania, and Michigan, after accusing his Democratic opponents of “stealing” the election following alleged ballot dumps favouring Biden.
Some investors had warned that the US dollar could be significantly impacted in the short run amid growing election uncertainty. Indeed, the market has already shown signs of attempting to price in a Biden victory, which has become apparent following the appreciation of currencies that were affected by Trump’s tariffs. Bannockburn Global Forex chief market strategist Marc Chandler noted to CNBC that the US dollar may not bounce back fast enough if Biden officially wins. “That’s the real question, whether today is a one-day wonder, or we get follow-through. My guess is we get follow-through.”
Likewise, the markets are also waiting on the outcome of a Federal Reserve two-day meeting, which is expected to conclude Thursday. However, the Federal Reserve will likely not announce any new changes to its monetary policy, given the growing uncertainty surrounding the US election.
Information for this briefing was found via CNBC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
