• Karry James

Dollar Up, but Caution Reigns as U.S. Election Draws Ever Closer

SignalsFactory - The dollar was up on Wednesday morning in Asia, but investors are avoiding big moves and risks ahead of the U.S. presidential election on Nov. 3. In Europe, reports that France could reintroduce a national lockdown to curb the spread of COVID-19 sent the Euro tumbling against the dollar. The U.S. Dollar Index that tracks the greenback against a basket of other currencies was up 0.22% to 93.127 by 10:05 PM ET (2:05 AM GMT). The euro was down against the dollar on Wednesday, a third consecutive trading session in the red for the single currency. Despite its gains, sentiment for the greenback showed signs of turning bearish, with the election less than a week away. Some investors are 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 tenterhooks. “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 told Reuters. French President Emmanuel Macron is due to give a televised address later in the day. Although no details about what the speech will cover were given, it is widely expected that the government will re-impose a national lockdown starting Thursday. But the focus remains on the U.S., which is also struggling with its own second wave. 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 The USD/JPY pair inched up 0.03% to 104.44. The dollar steadied against the safe-haven yen, with Tuesday’s decline seeing it near a one-month low. The AUD/USD pair inched up 0.03% to 0.7130. The AUD’s gains were capped by data showing that Australia’s Consumer Price Index (CPI) rose 1.6% quarter-on-quarter during the previous quarter, higher than the 1.5% predicted in forecasts prepared by Investing.com. The Reserve Bank of Australia is also tipped to announce lower interest rates and increased government debt purchases after its next meeting on Nov. 3. Across the Tasman Sea, the NZD/USD pair inched down 0.06% to 0.6703. The USD/CNY pair edged up 0.20% to 6.7180. The GBP/USD pair inched down 0.06% to 1.3035. 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.

Dollar Up, but Caution Reigns as U.S. Election Draws Ever Closer

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