Friday, February 3, 2023

Dollar Up, Despite Diminishing Hopes for Large U.S. Stimulus Package By


© Reuters.

By Gina Lee – The dollar was up on Friday morning in Asia, reversing earlier losses even as a victor is yet to be declared in the U.S. presidential elections and expectations that large stimulus packages to support the COVID-19-hit economy will be rolled out soon diminish.

The , which tracks the greenback against a basket of other currencies, was up 0.21% to 92.743 by 9:45 PM ET (1:45 AM GMT).

Democrat Joe Biden is close to declaring a victory, with 264 of the 270 electoral votes needed to win and Pennsylvania, Georgia, Nevada and North Carolina still counting votes. Incumbent President Donald Trump has 214 votes and has already mounted legal challenges to vote counts in Nevada, Pennsylvania, Georgia and Michigan as well as requesting a recount in Wisconsin, adding to the uncertainty.

An additional challenge to a Biden presidency is that Republicans retain control of the Senate, making it difficult to push through stimulus packages with large price tags.

Investors’ expectations of less fiscal spending have led to a large decline in long-term Treasury yields, which alongside a rally in shares and other risk assets, is expected to put the dollar under consistent selling in the long term, some investors warned.

“There is a green light for the resumption of dollar selling, reflecting past declines in real interest rates … there’s an argument that the Federal Reserve will have to backstop risk assets. The pandemic is still trending in the wrong direction,” National Australia Bank (OTC:) head of foreign exchange strategy Ray Attrill told Reuters.

Uncertainty about the U.S. economic recovery from COVID-19 is also growing, with investors digesting Thursday’s monetary policy released by the Federal Reserve and awaiting data, due later in the day.

These worries could lead to declines in the greenback into 2021, some investors warned.

The number of COVID-19 cases continues to rise, with several U.S. states reporting record levels of COVID-19 cases after the election.

The pair edged down 0.14% to 103.62, hovering near an eight-month low.

The pair was down 0.25% to 0.7264, after the Reserve Bank of Australia said it is prepared to expand bond purchases if needed to support the economy. An ongoing trade dispute with China, with a deadline for Chinese traders to stop buying at least seven categories of Australian commodities arriving, also has Australian exporters on edge.

Across the Tasman Sea, the pair inched up 0.10% to 0.6777.

The pair gained 0.29% to 6.6219.

The pair edged own 0.17% to 1.3120. The Bank of England also handed down its monetary policy on Thursday.

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