Dollar set for slight weekly gain after US elections
Adds comments, background
By Stefano Rebaudo and Rae Wee
Nov 8 (Reuters) -The U.S. dollar was on track for ending a volatile week with a slight gain, as markets weighed the impact of Donald Trump's return to the White House and what that means for the U.S. economy and its interest rate outlook.
The U.S. dollar had lost ground in the previous session as traders closed out profitable bets on a Trump presidency following his election victory.
"In the medium term, further dollar strength is not likely to prove sustainable," said Ulrich Leuchtmann, head of forex research at Commerzbank, adding that "the actual policy of the Trump administration is likely to lag behind its announcements".
Against a basket of currencies, the dollar =USD ticked up 0.05% to 104.47, on track to gain about 0.13% for the week.
It had rallied 1.53% on Wednesday as "Trump trades" picked up strongly.
How Chinese authorities stimulate a struggling economy has been a key focus in recent months for Antipodean currencies, but also for the euro as the bloc's economy is quite dependent on China's demand.
China's yuan traded offshore CNH=D3 weakened slightly as investors processed an announcement that China will allow local governments to issue 6 trillion yuan ($838.77 billion) in bonds to swap for off-balance sheet or "hidden" debt over three years.
The offshore yuan CNH=D3 was last 0.4% lower at 7.1773 per dollar. It was at 7.189 before the press conference of the Standing Committee of the National People's Congress.
The single currency dropped 0.2% to $1.078 and was headed for a 0.5% decline for the week which saw the collapse of Germany's coalition government.
According to George Saravelos, head of forex research at Deutsche Bank, the recent political instability in Germany could be positive for the euro, but he said it was too early to price in.
"The impact would run via the potential confidence effect boosts of a more stable government, and more importantly the direct economic effects of a potentially more pro-active fiscal stance," Saravelos said.
German opposition parties and business groups on Thursday urged Chancellor Olaf Scholz to trigger a new election quickly to minimise political uncertainty after his three-way coalition collapsed.
The U.S. Federal Reserve on Thursday cut interest rates by 25 basis points as widely expected and flagged a patient, cautious approach to further easing.
The central bank's rate trajectory has been clouded by Trump's election victory as his plans for hefty import tariffs are widely expected to stoke inflation.
Traders have reacted to the outcome of the election by trimming bets on rate cuts next year FEDWATCH, as tariffs are supposed to fuel inflation.
However, Fed Chair Jerome Powell said the results of Tuesday's presidential election would have no "near-term" impact on U.S. monetary policy.
The yen JPY=EBS rose 0.4% to 152.34 per dollar.
The Australian dollar AUD=D3, often used as a liquid proxy for its Chinese counterpart, fell 0.45% to $0.6648 roughly unchanged after news from China.
The Aussie was set for a 1.4% weekly gain, its best since mid-September, drawing support from buoyant risk sentiment.
The New Zealand dollar NZD=D3 eased 0.30% to $0.6007 but was similarly on track to gain 1% for the week.
World FX rates https://tmsnrt.rs/2RBWI5E
Reporting by Stefano Rebaudo and Rae Wee; Editing by Christopher Cushing and Ros Russell
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
