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Dollar’s suffering continues after Biden victory

Dollar’s suffering continues after Biden victory

The US dollar continued to suffer against major currencies after the announcement of Democratic Party candidate Joe Biden win of the presidency of the United States, which pushed the high-risk currencies higher versus the US dollar.

The dollar index, which measures the performance of the federal currency against a basket of six major currencies, trading earlier today near its lowest level in nine weeks at 92.38, before recovering slightly.

Traders are now looking to riskier currencies after Biden’s win that caused some stability in financial markets, with the dollar paying the price of expectations of further stimulus and continued easing of monetary policy by the Federal Reserve.

Democratic candidate Joe Biden won Pennsylvania over the weekend, thus obtaining the 270 electoral votes needed to win the US presidential election against incumbent Donald Trump. 

While Trump has refused to concede so far, to keep his hope to reverse the result through recount and legal procedures, it is a slim hope judging by historical precedent.

Market traders are preparing for the post-Trump era in financial markets, an era in which the dollar is expected to weaken in light of the low interest rates of the Federal Reserve, in addition to the possibility of investors moving away from the dollar as a safe haven.

The euro also fell against the dollar today, but after hitting its highest level in seven weeks at 1.1897, to start a limited decline, reaching its lowest level during today's session at 1.1863.

In addition, the dollar pair fell against the Chinese yuan by 0.6% to 6.5718, and dropped to the lowest level in more than two years, as traders hope that Biden's victory will lead to more friendly policies between the United States and China. 

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