Dollar dips as Biden gains upper hand in tense US election

The dollar slipped to its weakest level in more than two years against the yuan and eased against other Asian currencies as Democrat Joe Biden edged closer to the White House in a nail-biting US presidential election.

Financial markets, however, were braced for days or even weeks of uncertainty as Republican incumbent President Donald Trump has opened a multi-pronged attack on vote counts in several states by pursuing lawsuits and a recount.

That could hamper the dollar in the short run, traders say.

Elsewhere, sterling fell against the dollar and the euro after a media report that the Bank of England, which announces a policy decision later on Thursday, is considering negative interest rates.

The Federal Reserve, which is expected to keep policy on hold on Thursday, is also in focus as traders navigate market volatility in the wake of a knife-edge US election that has pushed up the yuan and the Mexican peso.

Biden has claimed the pivotal Midwestern states of Wisconsin and Michigan. Late reporting showed the former vice president with a lead in Nevada and Arizona, while Trump held a lead in Georgia and Pennsylvania.

Expectations that a Biden administration would strike a slightly softer tone on trade policy is likely to weaken the dollar against the currencies of countries that often faced the threat of tariffs during Trump’s administration, analysts said.

“The moves in the yuan and the peso show that the market is trying to price in a Biden victory,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.

“For slightly different reasons, we could also see the euro gain against the dollar.”

The onshore yuan CNY=CFXS briefly rose to over a two-year high of 6.6381 per dollar, extending its recent gains as China’s currency has become a popular trade to bet on a Biden victory.

Emerging market currencies such as the Malaysian ringgit MYR=MY and the Indonesian rupiah IDR= also rose against the greenback.

The euro EUR=EBS bought $1.1738 on Thursday, steady from the previous session.

Meanwhile, Trump’s re-election campaign on Wednesday said it had filed a lawsuit in Georgia seeking to pause the state’s count for the presidential election.

The lawsuit, brought against the Chatham County Board of Elections, asked a judge to order the county to secure and account for ballots received after 7 p.m. on Election Day, according to a court document released by the campaign.

Our lawyers have asked for “meaningful access”, but what good does that do? The damage has already been done to the integrity of our system, and to the Presidential Election itself. This is what should be discussed!

— Donald J. Trump (@realDonaldTrump) November 4, 2020

“President Trump and his team are fighting for the good of the nation to uphold the rule of law, and Georgia’s law is very clear: to legally count, mail ballots must be received by 7:00 p.m. on Election Day,” deputy campaign manager Justin Clark said in a statement.

Trump’s campaign has mounted a multi-pronged legal attack in several battleground states in the wake of the tight November 3 presidential election.

The campaign has asked to intervene in a pending US Supreme Court case over whether Pennsylvania, another key state that was still working its way through hundreds of thousands of mail-in ballots, should be permitted to accept late-arriving ballots sent by Election Day.

It also said it has filed lawsuits in Michigan and Pennsylvania seeking to halt vote counting, arguing that officials had failed to allow fair access to counting sites.

“The Trump campaign is filing a number of meritless lawsuits around the country. Don’t be deceived,” Democratic Party lawyer Marc Elias said on Twitter. “They know they have lost and this is all they have left.”

People have the right to demand a recount, says Wisconsin Governor Tony Evers: