USD down on election day
Tuesday 3 November, 2020
Daily Currency UpdateOn the final day of voting in the 2020 US Presidential election, demand for the US dollar was down. That would be expected as uncertainty surrounds who will ultimately be the next president of the United States.
One thing is for certain, we are bound to see increased volatility in currency markets in the coming weeks, so anyone who needs to move money either into or out of US dollars should be looking to use this volatility to their advantage.
Typically, uncertainty contributes to a risk-off environment and helps strengthen safe-haven currencies, including the USD. This has been an important factor in the recent USD recovery since mid-September as we approach the election and US fiscal stimulus continues to be delayed.
Earlier this week, OFX published an article outlining impacts of the election on currency exchange. Read it here.
Key MoversGreat British pound started the week trading in a narrow trading range versus the euro and the US dollar in what appears to be the quiet before a potential storm coming in from across the pond. Though Brexit negotiations and the impending lockdown in England are high up on investors’ watchlists, it’s the US election which is the real market moving event.
GBP is expected by many camps to have a tough November, kicked off by Thursday’s Bank of England decision which is expected to increase monetary stimulus but not to cut rates, yet. The bank will probably look to increase its quantitative easing program this month, but the prospect of an interest rate cut for the first time in its history into negative territory is not off the table.
The Australian dollar maintained a narrow range through trade on Monday edging upward overnight having tested a break below 0.70 through the domestic session. The AUD made several forays below key technical and psychological supports as Friday’s risk off tone spilled into a new week. The implementation of new lockdown measures across Europe at the weekend only heightened fears a Q4 recovery has all but evaporated, prompting investors to adjust global growth expectations. Having touched intraday lows at 0.6995 the AUD recovered, extending back above 0.7050 to touch session highs just short of 0.7060.
- EUR/USD: 1.162 - 1.173 ▼
- GBP/USD: 1.289 - 1.307 ▼
- AUD/USD: 0.703 - 0.717 ▼
- USD/CAD: 1.310 - 1.326 ▼