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Dollar Drops On Improved Risk Sentiment After Biden's Victory

dollar 080219 09nov20 lt

The U.S. dollar lost ground against its major counterparts in the Asian session on Monday, as the victory of Democratic candidate Joe Biden in the U.S. presidential election supported hopes for stimulus to boost economic growth.

Biden was elected as the 46th President of the United States after a bitter contest with record voter turnout during the pandemic crisis.

Biden has won over 74 million votes and defeated Republican President Donald Trump, who got more than 70 million votes.

A narrow victory in the key battleground of Pennsylvania pushed Biden to the 270 electoral vote threshold needed to win the White House.

Trump refused to accept defeat and threatened legal challenges regarding the vote counting process, saying the "election is far from over."

Biden pledged that containing the coronavirus pandemic will be his top priority, along with mending a battered economy.

Investors expect that a divided government with a Democratic controlled House and a Republican-controlled Senate is unlikely to raise taxes and signal a more predictable approach to trade policy.

The dollar was trading in a negative territory on Friday, as continued uncertainty about the outcome of the U.S. presidential election weighed on the currency. It dropped 0.1 percent against the yen and 0.4 percent against both the euro and the franc for the day.

The greenback depreciated to 1.1896 against the euro, its lowest level since September 15. This was down by 0.2 percent from Friday's closing value of 1.1873. Next key support for the currency is likely seen around the 1.20 level.

The greenback shed 0.2 percent to 0.8980 against the franc, a level unseen since January 2015. At Friday's close, the USD/CHF pair was valued at 0.8998. The dollar is seen finding support around the 0.86 region.

The greenback was down by 0.4 percent versus the pound, at over a 2-month low of 1.3193. The pound-greenback pair had finished last week's trading session at 1.3144. Immediate support for the currency is likely seen around the 1.34 level.

The U.S. currency fell 0.7 percent against the kiwi, touching a 1-1/2-year low of 0.6817. At Friday's trading close, the pair was quoted at 0.6770. Should the greenback falls further, it is likely to test support around the 0.70 region.

The greenback lost 0.6 percent to reach a 1-1/2-month low of 0.7301 versus the aussie. The aussie-greenback pair was worth 0.7258 at last week's close. Further fall in the currency may challenge support around the 0.75 level.

Australia building permits rose a seasonally adjusted 15.4 percent on month at 15,827.

Permits for private sector houses rose 9.7 percent to 10,238 and permits for private sector dwellings excluding houses spiked 23.4 percent to 5,189.

The greenback was 0.4 percent lower at over a 2-month low of 1.3006 versus the loonie. The greenback was trading at 1.3055 a loonie at Friday's close. The greenback is likely to face support around the 1.29 region.

In contrast, the greenback strengthened against the yen, as the latter weakened amid risk appetite. The greenback rebounded to 103.56 versus the yen, from a low of 103.19 seen at 5:45 pm ET. The pair was worth 103.34 when it ended deals on Friday. On the upside, key resistance is seen near the 105.00 level.

Preliminary data from the Cabinet Office showed that Japan's leading index rose to the highest in over a year in September.

The leading index, which measures the future economic activity, rose to 92.9 in September from 88.5 in August. Economists had expected a reading of 88.6.

Looking ahead, Eurozone Sentix investor sentiment index for November is due in the European session.

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