SYDNEY- The dollar hit a 10-week low on Monday as investors heralded Joe Biden’s election as US president by buying trade-exposed currencies on expectations that a calmer White House could boost world commerce and that monetary policy will remain easy.
The Chinese yuan struck a 28-month peak, the New Zealand dollar made a 19-month high and the Australian dollar hit a seven-week top as the dollar index fell to its lowest since early September. The South Korean won hit a 21-month high of 1,115.33 per dollar.
Sterling hit its highest in more than two months while the euro rose 0.1 percent, extending an almost 2 percent gain from last week to hit a two-month high of $1.1895.
Biden crossed the threshold of the 270 electoral college votes required for victory on Saturday by winning the battleground state of Pennsylvania. Republicans appear to have retained control of the Senate, though the final makeup may not be clear until runoff votes in Georgia in January.
“The outcome is ideal from a market point of view,” said CMC Markets’ chief strategist in Sydney, Michael McCarthy. “Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”
The prospect of more gridlock also means that expectations for a massive US fiscal stimulus package have been lowered, which has sent bond yields sharply lower in anticipation of less borrowing and more quantitative easing from the US Federal Reserve.