Dollar sinks deeply

1 min read

The dollar sank near its lowest level in nearly three years on Thursday after Democrats won control of the U.S. Senate, clearing the way for a larger fiscal stimulus under President-elect Joe Biden.

Currency markets were largely unperturbed by scenes of chaos in Washington as supporters of outgoing President Donald Trump stormed Capitol Hill.

Analysts generally assume a Democrat-controlled Senate would be a net positive for economic growth globally and thus for most risk assets, but negative for bonds and the dollar as the U.S. budget and trade deficits may widen further.

The dollar index was little changed at 89.321 in early Asian trade on Thursday, after dipping to its lowest since March 2018 at 89.206 overnight.

The yield on the benchmark 10-year Treasury note climbed as high as 1.054% on Wednesday for the first time since the market mayhem of mid-March.

“The dollar will remain weaker against commodity currencies like the Aussie and emerging market currencies,” which benefit when risk sentiment is positive, he said.