(Bloomberg) — The dollar dropped a third day to its lowest level in more than two years as Joe Biden looked increasingly likely to claim the U.S. presidency.
The Bloomberg Dollar Spot Index fell as much as 0.9% to the lowest since May 2018. That came as the euro rallied 1% and the yen strengthened past 104 per dollar, its strongest level in eight months and a resistance level from 2016. It was broken briefly during virus-induced market panic in March.
“The dollar has been declining as a result of the increasing likelihood of a Biden victory,” said Sonja Marten, a strategist at DZ Bank AG. “For now, the dollar is trading as a safe haven and the prospect that we are going to get a clear election result sooner than some had feared is currently reflected in rising risk appetite, and hence a weaker dollar.”
Investors have been bracing themselves for such a slide in the case of a Biden win, which could pave the way for more stimulus. Combined with an decidedly dovish Federal Reserve, whose policy makers are due to meet later Thursday, this creates increased headwinds for the world’s reserve currency.
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