Riskier currencies maintain gains against dollar

London

THE dollar stabilised on Monday after tumbling to a 10-week low in the wake of Joe Biden's election as US president with euro/dollar - the most traded currency pair in the world - holding below US$1.19 and the Japanese yen remaining close to an eight month high.

Scandinavian currencies and the Australian dollar - all very sensitive to international trade developments and investors' risk appetite - were stronger. The Chinese yuan was the biggest mover among major currencies, having struck a 28-month peak of 6.5501, and last trading up 0.6 per cent at 6.5545.

The Norwegian kroner was not far behind, rising by 0.5 per cent against the dollar to 9.1135, after hitting a seven-week high of 9.1020. The Swedish kronor was also up by 0.4 per cent at 8.6160, after reaching a 10-week high of 8.6100 before.

"It's classic risk preference, risk-on, higher asset prices across the board - stocks, commodities - and it's going to the foreign exchange market," said Neil Jones, European head of hedge fund sales at Mizuho.

"The US dollar, as one would expect, is a safe-haven currency and still the world leader in terms of outperformance in times of risk aversion and so one would expect it to be on the backfoot in times of risk preference," Mr Jones said. The market may be a little reluctant to take euro higher, he added.

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The Aussie dollar rose 0.4 per cent at 0.7286 versus its US counterpart, having hit earlier 0.7301, its highest since Sept 21.

The euro was last trading at US$1.1884, flat on the day, after rising to a two-month high of US$1.1899 in the Asian session.

The US dollar hit earlier a 10-week low as investors heralded Mr Biden's election win by buying trade-exposed currencies on expectations that a calmer White House could boost world commerce and that monetary policy will remain easy.

The US dollar changed hands at 103.5 Japanese yen, up 0.2 per cent on the day, although the yen was close to its strongest since March.

The US dollar index - which compares the greenback against a basket of currencies - was steady at 92.21, after dropping to a 10-week low of 92.12. Sterling hit its highest in more than two months.

"The (US election) 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." Selling of the US dollar was held in check by underlying virus worries and because Donald Trump, the first incumbent to lose a re-election bid in 28 years, has made no sign of conceding while fighting legal battles to overturn the result.

Traders are also wary of fresh lockdowns as Covid-19 cases surge, with the global tally of infections topping 50 million on Sunday as cases in the US surpassed 10 million. REUTERS