* 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
steadied 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 fell to a
fresh 10-month low of 102.60 yen on Wednesday before steadying.
The euro EUR= also rose past major resistance at $1.2310
to as high as $1.2328 in early Asia trade, its strongest since
April 2018, before slipping back to $1.2281 as traders watched
close early results from Georgia flow in.
The Australian and New Zealand dollars hung on to hefty
gains to trade near multi-year highs, with the Aussie AUD=D3 a
touch softer at $0.7745 and the kiwi NZD=D3 touching a new
32-month top before easing back to $0.7240.
Sterling GBP= was slightly softer at $1.3607.
The outcome of the runoff vote to elect two senators in
Georgia will determine control of the U.S. Senate, although a
final result is not expected before Wednesday morning in the
United States - perhaps longer if it is close.
If they win both spots, Democrats will take control of the
Senate and would be able to pass their legislative agenda, which
could include higher taxes and more stimulus.
"The market reaction to the outcome will probably be
dictated by what it is assumed to mean for fiscal policy,
rightly or wrongly," said RBC Capital Markets currency
strategist Adam Cole.
"If the Democrats do manage to take both seats the
assumption will be that (President-elect Joe) Biden has more
freedom to set policy and that likely means more fiscal easing,"
he said, which would lift risk sentiment and weigh on the
dollar.
Vasu Menon, investment strategy executive director at OCBC
Bank in Singapore said that while potential tax hikes are "not
particularly market-friendly", the extra spending would be
broadly bullish for commodities and emerging markets.
The dollar has fallen 13% against a basket of currencies
=USD since it hit a three-year peak last March. The dollar
index was steady at 89.491 on Wednesday, just above a 2-1/2 year
low hit on Monday.
Bets against the dollar have become crowded as investors
wager that low U.S. interest rates and a big trade deficit can
keep it heading lower for some time yet.
Asian currencies have received an added boost from China's
rising yuan, which increases China's purchasing power for
commodities and other imports.
The yuan surged to its highest since June 2018 on Tuesday
after the People's Bank of China lifted the midpoint of its
trading band by 1%, the biggest one-day lift since China
abandoned a peg to the dollar in 2005.
Traders took that as cue to keep buying, before profit
taking and some selling by major state-owned Chinese banks
cooled the rally. In offshore trade, the yuan steadied at 6.4293
on Wednesday CNH= .
It has 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.
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Currency bid prices at 9:50AM in Singapore (0150 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.2288 $1.2298 -0.08% +0.57% +1.2328 +1.2281
Dollar/Yen JPY=D3 102.7900 102.7400 +0.07% -0.47% +102.8150 +102.6100
Euro/Yen EURJPY= 126.30 126.30 +0.00% -0.49% +126.4600 +126.1500
Dollar/Swiss CHF=EBS 0.8791 0.8783 +0.09% -0.63% +0.8794 +0.8771
Sterling/Dollar GBP=D3 1.3609 1.3623 -0.11% -0.40% +1.3645 +1.3601
Dollar/Canadian CAD=D3 1.2679 1.2668 +0.08% -0.44% +1.2687 +1.2665
Aussie/Dollar AUD=D3 0.7751 0.7760 -0.11% +0.77% +0.7772 +0.7745
NZ NZD=D3 0.7248 0.7251 -0.04% +0.93% +0.7261 +0.7243
Dollar/Dollar
All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX