On Tuesday, the American currency fell against almost all of its major counterparts with a gauge of global equity indices reporting intransigent gains, as investors were found to be betting heavily on a landslide Biden victory which in effect could cement a path towards another round of trillion-dollar US stimulus.
In point of fact, while a fiercely contested and acrimonious US Presidential election had been underway on Tuesday, stocks in Europe and Wall St. climbed over 2 per cent, while stocks rose in early Asia-Pacific trading hours after the Reserve Bank of Australia had slashed its benchmark borrowing cost near-zero and ramped up a bond-repurchasing program.
In tandem, latest move from the Reserve Bank of Australia had bolstered investors’ bet that the BoE (Bank of England) would also announce an identical measure after Thursday’s policy meeting, which in effect had led to an Apollonian rally for pound sterling against the greenback and euro.
On top of that, a perilous plunge of the American currency on Tuesday’s FX market was mostly galvanized by an increase in investors’ notion that a Biden triumph would likely to soften the US Dollar further, as the Democratic contender of the Republican President Trump has been expected to spend a hefty upsum for US stimulus and to involve in raft of repair-works on cross-border trading at the expense of the American currency.
Dollar plunges, global equities rise on hopes of Biden victory
Citing statistics, on the day’s equity market round off, the MSCI’s benchmark of global equities surged 1.92 per cent, while MSCI’s broadest index of Asia-Pacific shares except Japan gained 1.4 per cent.
Besides, the American currency fell 0.71 per cent against its European peer to $1.1723, while the safe-haven Japanese Yen had fleshed up its footings further against the greenback by 0.22 per cent to wrap up the day at 104.50 Yen per US Dollar.
Meanwhile, as the US Dollar Index (DXY) measured against a basket of six major currencies on an average had been hammered down by 0.66 per cent, a head of research at MUFG, Derek Halpenny said, “The markets in the last 48 hours have become a bit more convinced of a Biden victory without the messy risk of weeks of uncertainty and turmoil. ”