Let us check the market. Forecasts are for Joe Biden might win the United States presidency. Thus, he will offer fiscal stimulus after the elections. Thus, on Friday, the United States dollar fell to its lowest in nearly three weeks and was headed for a second straight week of losses.
Several Wall Street banks expect a stimulus package no matter which candidate wins. Nevertheless, they say that a Biden presidency (in case Democrats retake control of the Senate) will most probably result in a bigger stimulus package. For example, UBS Asset Management assigned a seventy-five percent probability of a Biden win.
Brown Brothers Harriman strategists said that besides possibly losing the presidency, Republicans might lose control of the Senate. It is because betting odds give Democrats a near seventy percent chance of taking the Senate.
This week, IPSOS/Reuters polling put Biden (Democrat) narrowly ahead of republican President Donald Trump in five key states – Arizona, Florida, Michigan, Pennsylvania, and Wisconsin.
Dollar and Others
Thus, there are rising expectations of Biden’s victory. It has a calming effect on market volatility. Moreover, it boosted appetite for currencies that have been hurt with the trade war between Beijing and Washington.
Marshal Gittler works for BDSwiss Grup. He is ahead of investment research there. So, Gittler said that there had been a noticeable decline in implied volatility around the election date. Thus, it suggests that the market gets more confident in the outcome. That is satisfying with the likely result.
The United States dollar is down 0.8% for the week. Against a basket of major currencies, the greenback eased 0.3% at 93.30. Last week, it fell by a similar margin.
In late September, the United States dollar reached two month-high at 94.75.
The biggest beneficiary of the rising hopes of a Biden win was the Chinese currency. It posted the most significant daily rise in more than four years.
That is the situation with the Forex market.