* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
(Adds details, updates prices; previous LONDON)
By Karen Brettell
NEW YORK, Nov 5 (Reuters) - The U.S. dollar fell to two-week
low against a basket of currencies and a seven-month low against
the Japanese yen, as investors adjusted for the prospect that
Republicans will maintain control of the U.S. senate, and stifle
any plans for a large new stimulus package.
Democrat Joe Biden edged closer to victory in the U.S.
presidential race as election officials tallied votes in the
handful of states that will determine the outcome and protesters
took to the streets. But the so called ‘blue wave' where Democrats would also
take control of the Senate in Congressional elections looked
unlikely.
“I think the market's assuming that Biden wins the White
House but that the Senate is not going to be in the Democrats'
hands, so you don't have as big of a stimulus,” said Marc
Chandler, chief market strategist at Bannockburn Global Forex in
New York.
U.S. Treasury yields dropped from four-month highs as a
large jump in near-term supply to fund stimulus became less
likely, reducing the appeal of the debt and weighing on the
dollar.
“Typically a country with a large budget deficit, a large
current account deficit, has to offer a large interest rate
premium to suck in world savings, and because we can't, because
of the weak economy, the low inflation, I think that we can't
offer a sufficiently high interest rate premium,” said Chandler.
“This is a broad dollar move.”
Stronger risk appetite as stock investors bet that
Republicans would stifle any Democrat plans to raise taxes or
tighten corporate regulations also helped to reduce demand for
the greenback.
The dollar index fell 0.81% against a basket of currencies
=USD to 92.66.
The euro EUR jumped 0.90% to $1.1828. The dollar dropped
0.68% against the Japanese yen JPY= to 103.77 yen, the lowest
since March 12, and breached technical support at 104 yen that
will now likely form resistance.
The yuan CNH= gained to a more than two-year high of
6.5994. The Chinese currency has been heavily affected by
Sino-U.S. disputes since the outbreak of the bilateral trade war
in 2018.
The Federal Reserve will complete its two-day meeting on
Thursday, but is not expected to announce any major changes in
monetary policy.
"The Fed today is a bit of a sideshow but there is a chance
it may strengthen forward guidance around potential quantitative
easing and that would be dollar negative as you may also have
less stimulus," said Justin Onuekwusi, portfolio manager at
LGIM.
The dollar was also weak against the British pound and
Norwegian crown even after the Bank of England ramped up its
bond purchase plan and Norway's central bank said it would
maintain its accommodating policy. U.S. jobs data for October released on Friday is the next
major economic focus.
========================================================
Currency bid prices at 9:37AM (1437 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1828 $1.1722 +0.90% +5.51% +1.1859 +1.1712
Dollar/Yen JPY= 103.7700 104.4800 -0.68% -4.68% +104.5500 +103.6200
Euro/Yen EURJPY= 122.76 122.53 +0.19% +0.66% +123.1600 +122.2200
Dollar/Swiss CHF= 0.9060 0.9124 -0.70% -6.39% +0.9135 +0.9045
Sterling/Dollar GBP= 1.3089 1.2985 +0.80% -1.28% +1.3109 +1.2932
Dollar/Canadian CAD= 1.3065 1.3139 -0.56% +0.58% +1.3177 +1.3052
Australian/Doll AUD= 0.7241 0.7173 +0.95% +3.13% +0.7254 +0.7146
ar
Euro/Swiss EURCHF= 1.0717 1.0690 +0.25% -1.24% +1.0726 +1.0687
Euro/Sterling EURGBP= 0.9037 0.9025 +0.13% +6.88% +0.9071 +0.9007
NZ NZD= 0.6752 0.6694 +0.87% +0.22% +0.6763 +0.6680
Dollar/Dollar
Dollar/Norway NOK= 9.1907 9.3174 -1.36% +4.70% +9.3675 +9.1472
Euro/Norway EURNOK= 10.8730 10.9269 -0.49% +10.52% +10.9740 +10.8460
Dollar/Sweden SEK= 8.6865 8.7772 -0.16% -7.07% +8.8034 +8.6657
Euro/Sweden EURSEK= 10.2763 10.2928 -0.16% -1.84% +10.3180 +10.2725