The dollar fell sharply against the euro and the British
pound on Tuesday, the day of the US presidential election,
suffering from its status as a safe haven in a market that was
regaining a taste for risk and equities.
At around 3:15 p.m., the dollar lost 0.52% against the euro at
1.1702 dollars to the euro and 0.77% against the British currency
at 1.3017 dollars to the pound.
The polls place Democrat Joe Biden in the favor of Republican
President Donald Trump with a 7% to 9% gap in the popular vote, but
the race promises to be close in several key states.
This surge in risk appetite is based on expectations of a Biden
government, which increases the chances of greater stimulus
measures for the economy,” said Jane Foley, an analyst at
Rabobank.
For Boris Schlossberg of BK Asset Management, the strong
participation, which could reach 65%, a high for a long time,
“should favour Joe Biden”.
But Ms. Foley, like many foreign exchange observers, urged
caution given the possibility of having to wait a long time for
final results, or for a party to win the presidency without having
the Senate.
In the event of a contested outcome, risk aversion could
strike the global market and boost appetite for safe havens like
the dollar, yen and gold,”
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warned Lukman Otunuga, an analyst at FXTM.
But “we can not exclude that riots take place in the United
States, which could cause a sell-off on the dollar,” said
Antje Praefcke of Commerzbank for his part.
During the session, the greenback even lost more than 1% against
the European currency, but it remained framed by levels of
technical resistance, underlined Boris Schlossberg. The analyst
nevertheless stressed that when “the results are displayed on the
screens, we should expect a resurgence of volatility which could
then easily break these resistance levels”.
The New York Stock Exchange rose for its second consecutive
session.
Many analysts thus advised to wait for the results to position
themselves. “We must still remember that there is a meeting of
the monetary committee of the US Federal Reserve (Wednesday and
Thursday),” said Jeffrey Halley, an analyst at Oanda.
In Europe, the Bank of England is due to release its monetary
policy decision on Thursday.
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