By Stanley White
TOKYO (Reuters) – The dollar nursed losses against many currencies on Friday as a contentious U.S. presidential election diminished hopes for large stimulus to support the economy any time soon.
Investors are betting that Democrat Joe Biden will become the next president but Republicans will retain control of the Senate, which will make it difficult for the Democrats to pass the larger fiscal spending they have been pushing.
Biden maintains an edge over President Donald Trump, but a few important states are still counting votes and Trump is mounting legal challenges to vote counts, so there is still a high degree of uncertainty.
A large decline in long-term Treasury yields due to expectations for less fiscal spending, combined with a rally in equities and other risk assets, has placed the dollar under consistent selling pressure that is likely to continue.
“There is a green light for the resumption of dollar selling, reflecting past declines in real interest rates,” said Ray Attrill, head of foreign exchange strategy at National Australia Bank in Sydney.
“There’s an argument that the U.S. Federal Reserve will have to backstop risk assets. The pandemic is still trending in the wrong direction.”
The dollar traded at 103.59 yen
Against the euro
The British pound
The dollar index against a basket of six major currencies stood at 92.654, close to a two-week low.
Investors also await the release of U.S. non-farm payrolls later on Friday, which is forecast to show a slight slowdown in job creation.
Worries about the U.S. economy are growing, which is a reason to expect declines in the dollar to continue into next year, according to some analysts.
In addition to the uncertainty about the presidential election, new coronavirus cases are rising to record levels in several states, which could curb U.S. economic activity.
Elsewhere, the Australian dollar
The declines in the Aussie also dragged the New Zealand dollar
(Reporting by Stanley White; Editing by Sam Holmes)
