FOREX-Dollar tilts towards Biden win heading into U.S. election – Reuters UK
* Dollar loses ground, euro rises * Investors brace for volatility after polls close * Analyst warn of election risks * U.S. election results to filter in through Wednesday Asia trade * Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E By Julien Ponthus LONDON, Nov 3 (Reuters) - Foreign exchange markets in Europe tilted on Tuesday towards pricing a victory for U.S. Democratic candidate Joe Biden against President Donald Trump despite warnings that possible post-election disputes could unleash weeks of dollar volatility. The dollar was down 0.4% against a basket of currencies at 93.656 after hitting a month-high on Monday. Analysts believe a Biden win would weaken the dollar as the former vice-president is expected to spend big on stimulus and to take a freer approach to trade, boosting other currencies at the dollar's expense. They cautioned, however, that uncertainty was very high about the election outcome and that taking positions might prove premature. The euro extended gains and rose 0.49% against the dollar to $1.1645 while sterling also went up 0.56% to just below $1.30. Meanwhile, European stock markets were also making strong gains while euro zone government yields rose, another sign investors were gradually switching from a cautious mood and getting ready to bet on a clear victory for the Democratic candidate. "I'm more nervous than European markets are today," said Berenberg chief economist Holger Schmieding, warning some investors may be jumping the gun on the issue, particularly if no clear winner emerged swiftly from the polls. Republican Trump, who is trailing Biden in national opinion polls, has criticised mail-in ballots and suggested he would deploy lawyers if states are still counting votes after Election Day on Tuesday. Overnight gauges of volatility for major currency pairs jumped to multi-month highs ahead of the outcome of the election. Euro/dollar implied volatility surged to 19%, its highest level since the depths of the market mayhem in March, compared with less than 7% on Monday. Other indicators like dollar/yen volatility also surged. Investors had taken a more cautious approach as the election neared. Rather than outright bets on a particular outcome, many traders have flocked to the safety of dollars so that they are well positioned to take advantage of volatility when results arrive. "Those who haven't hedged yet, but who would feel the pain in case of strong moves, should hedge themselves as soon as possible, as it is getting increasingly expensive", Commerzbank strategist Antje Praefcke wrote to her clients in a note. "There is only one thing we can do: fasten seatbelts, put the helmets on and wait what happens in EUR-USD over the coming days," she said, adding that: "Even riots in the U.S. cannot be excluded, which may cause the market to sell the dollar." It is not unusual in the United States for states to take several days or even weeks to count their votes, and a record surge in mail ballots as a result of the COVID-19 pandemic could draw out the process further this year. "Under no scenario will Donald Trump be declared a victor on election night," Biden campaign manager Jennifer O'Malley Dillon told reporters. Among other currencies making gains against the dollar, the Aussie jumped 0.87% higher after an initial dip which followed the Reserve Bank of Australia lowering its policy interest rate by 15 basis points to 0.1% and announcing a bond-buying programme. The safe-harbour yen was also slightly higher, up 0.10% at 104.67 per dollar. ======================================================== Currency bid prices at 10:29AM (1029 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.1696 $1.1638 +0.50% +4.33% +1.1698 +1.1625 Dollar/Yen 104.6700 104.8100 -0.10% -3.61% +104.8100 +104.4850 Euro/Yen 122.41 121.93 +0.39% +0.38% +122.4700 +121.8300 Dollar/Swiss 0.9159 0.9194 -0.38% -5.34% +0.9191 +0.9155 Sterling/Dollar 1.2989 1.2917 +0.57% -2.05% +1.2995 +1.2911 Dollar/Canadian 1.3147 1.3229 -0.56% +1.17% +1.3234 +1.3138 Aussie/Dollar 0.7119 0.7057 +0.89% +1.48% +0.7132 +0.7028 NZ 0.6673 0.6634 +0.59% -0.82% +0.6683 +0.6622 Dollar/Dollar All spots Tokyo spots Europe spots Volatilities Tokyo Forex market info from BOJ (Reporting by Julien Ponthus and Tom Westbrook; Editing by Emelia Sithole-Matarise and Pravin Char)
Scalping Strategy Course (DVD + Online) - $299.00
In the much anticipated Forex Scalping Strategy Course, Vic and Sarid show you short-term focused techniques and strategies to make quicker profits while reducing market exposure.
Forexmentor Coach's Corner First Month (Online) - $149.00
The Coach's Corner offers 2 live sessions per week, an integrated approach to trading, FREE access to the VicTrade video course and Darko's Pattern Trading Video Lessons.