Dollar gains as US election race tighten

GulfToday Report

As early results of the US presidential election rolled in, the US dollar gained while riskier currencies dipped on Wednesday.

At the opening of European markets, the dollar climbed by 1%, the offshore-traded yaun while Australian dollar and Norwegian crown fell.

Investors who have been hopeful for Joe Biden’s victory are beginning to lose hope after President Donald Trump won in the key battleground states of Florida, Ohio and Texas.

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Chris Turner, global head of markets at ING said, one of the few things clear so far is that we are not going to see a Democrat landslide win as polls had suggested. That has wrong-footed an FX market which was positioned for some clarity.

Biden’s win is expected to improve the pandemic-hit economy via the injection of large stimulus while Trump’s re-election is expected to hurt currencies hit by his trade policies. 

Overnight volatility gauges for euro-dollar and dollar-yen fell, however, as investors waited for clarity. They had surged to their highest levels since March earlier this week.

The euro fell 0.7% at $1.1637 to the lowest in more than three months while sterling tumbled 1%