* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook and Scott Murdoch
SINGAPORE/HONG KONG, Jan 6 (Reuters) - The U.S. dollar took
a breather from its steady descent but could not entirely escape
selling pressure in Asia on Wednesday, as traders looked to the
outcome of a Senate election in Georgia to drive the next move
in market sentiment.
The dollar had dropped through a major support level against
the Japanese yen JPY= on Tuesday and it briefly extended lower
to a new 10-month low of 102.60 on Wednesday before steadying.
The euro EUR= also pulled back from a 32-month peak of
$1.2328 made early in the Asia session as counting pointed to a
close result in a poll that determines control of the U.S.
Senate. The Australian and New Zealand dollars kept pressure on the
greenback and hovered just below multi-year highs, while
sterling GBP= softened very slightly to $1.3614. AUD/
Democrats will control both houses of Congress if they win
both Georgia Senate seats up for contest.
The prospect of a Democrat agenda becoming law pushed bond
yields up and U.S. stock futures down in anticipation of higher
government borrowing, higher taxes and more tech regulation.
MKTS/GLOB
However, currency markets have been more equivocal, with the
likelihood of higher stimulus spending tempering the hit to
sentiment and holding the dollar back from making gains.
"The dollar is sort of undecided," said Vishnu Varathan,
chief economist at Mizuho Bank in Singapore, since investors are
divided whether higher yields will be eventually eroded by
higher inflation or flattered by lower inflation.
"My suspicion is that the immediate knee-jerk reaction would
be a slightly stronger dollar," he said. "(But) I don't think
this is a trade that markets will continue to chase...because I
don't think sentiment will be in a tailspin."
Against a basket of currencies the dollar index USD= hit a
fresh 2-1/2 year low on Wednesday before firming about 0.1% to
89.575. The benchmark 10-year Treasury yields US10YT=RR rose
above 1% for the first time since March. US/
Cryptocurrency bitcoin BTC=BTSP , sometimes seen as a hedge
against inflation, rose more than 4% and hit a record high of
$35,879.
GEORGIA MORNING DUE
A clear outcome in Georgia could arrive as soon as Wednesday
morning in the United States, although the tightness of the
count suggests it may take longer.
The latest results put the Democrats a fraction ahead in one
of the two Senate races and the two challengers neck-and-neck in
the other.
Michael J. Kelly, PineBridge Investments' global head of
multi assets in New York, though, said that even a sweep might
not be enough to shift the greenback from a pronounced downtrend
that has carried the dollar index 13% lower since March.
"Rising taxes and regulation will not cure today's weak
dollar," he said over email.
"The global rotation out of U.S.-based assets into Europe
and emerging would continue...soon we'll be back to focusing on
the vaccine roll outs."
Soaring currencies in Asia, where the economic recovery has
been most impressive, have caught an added boost from China's
rising yuan, which increases China's purchasing power for
commodities and other imports.
After a Tuesday surge, the yuan CNY= was steady at 6.4564
per dollar on Wednesday as profit taking and state-owned bank
selling cooled excitement about a big jump in its onshore
trading band. CNY/
The yuan gained 12% on the dollar since last May as China's
economic rebound has led the world's pandemic recovery.
Elsewhere, a rise in oil prices lifted exporters'
currencies, sending the Norwegian crown NOK= to a 21-month
high of 8.4350 per dollar and the Canadian dollar CAD= to a
32-month peak. O/R
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Currency bid prices at 1:17PM in Singapore (0517 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.2299 $1.2298 +0.01% +0.67% +1.2328 +1.2276
Dollar/Yen JPY=D3 102.8150 102.7400 +0.07% -0.47% +102.8650 +102.6100
Euro/Yen EURJPY= 126.44 126.30 +0.11% -0.38% +126.4600 +126.1500
Dollar/Swiss CHF=EBS 0.8782 0.8783 +0.01% -0.72% +0.8798 +0.8771
Sterling/Dollar GBP=D3 1.3615 1.3623 -0.09% -0.37% +1.3645 +1.3592
Dollar/Canadian CAD=D3 1.2663 1.2668 -0.04% -0.56% +1.2695 +1.2663
Aussie/Dollar AUD=D3 0.7772 0.7760 +0.17% +1.05% +0.7779 +0.7734
NZ NZD=D3 0.7263 0.7251 +0.15% +1.13% +0.7264 +0.7237
Dollar/Dollar
All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX