Dollar squeezed Senate votes

SINGAPORE/HONG KONG (Reuters) – Forex Signals | The U.S. dollar took a breather from its steady descent but could not entirely escape selling pressure in Asia on Wednesday, as traders looked to the outcome of a Senate election in Georgia to drive the next move in market sentiment.

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The euro also pulled back from a 32-month peak of $1.2328 made early in the Asia session as counting pointed to a close result in a poll that determines control of the U.S. Senate.

The Australian and New Zealand dollars kept pressure on the greenback and hovered just below multi-year highs, while sterling softened very slightly to $1.3614.

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Democrats will control both houses of Congress if they win both Georgia Senate seats up for contest.

US Dollar Trades Steady

The prospect of a Democrat agenda becoming law pushed bond yields up and U.S. stock futures down in anticipation of higher government borrowing, higher taxes and more tech regulation. Forex Signals – Euro to US Dollar

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However, currency markets have been more equivocal, with the likelihood of higher stimulus spending tempering the hit to sentiment and holding the dollar back from making gains.

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“The dollar is sort of undecided,” said Vishnu Varathan, chief economist at Mizuho Bank in Singapore, since investors are divided whether higher yields will be eventually eroded by higher inflation or flattered by lower inflation.

“My suspicion is that the immediate knee-jerk reaction would be a slightly stronger dollar,” he said. “(But) I don’t think this is a trade that markets will continue to chase…because I don’t think sentiment will be in a tailspin.”

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Against a basket of currencies the dollar index hit a fresh 2-1/2 year low on Wednesday before firming about 0.1% to 89.575. The benchmark 10-year Treasury yields rose above 1% for the first time since March. [US/]

Cryptocurrency bitcoin, sometimes seen as a hedge against inflation, rose more than 4% and hit a record high of $35,879.

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A clear outcome in Georgia could arrive as soon as Wednesday morning in the United States, although the tightness of the count suggests it may take longer. Pound to Euro GBPEUR Exchange Rate

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PineBridge Investments’ global head of multi assets in New York; US INDEX

“Rising taxes and regulation will not cure today’s weak dollar,” he said over email.

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“The global rotation out of U.S.-based assets into Europe and emerging would continue…soon we’ll be back to focusing on the vaccine roll outs.”

The U.S. dollar was down

Soaring currencies in Asia, where the economic recovery has been most impressive, have caught an added boost from China’s rising yuan; which increases China’s purchasing power for commodities and other imports.

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After a Tuesday surge, the yuan was steady at 6.4564 per dollar on Wednesday as profit taking and state-owned bank selling cooled excitement about a big jump in its onshore trading band.

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The yuan gained 12% on the dollar since last May as China’s economic rebound has led the world’s pandemic recovery.

Elsewhere, a rise in oil prices lifted exporters’ currencies, sending the Norwegian crown to a 21-month high of 8.4350 per dollar and the Canadian dollar to a 32-month peak.

Dollar squeezed Senate votes