The value of the US dollar could fall even further after Joe Biden won the presidential election!

ILLUSTRATION. The value of the US dollar could fall even further after Joe Biden won the presidential election! . REUTERS / Kevin Lamarque TPX IMAGES OF THE DAY

Source: Reuters | Editor: Hasbi Maulana

KONTAN.CO.ID – NEW YORK (REUTERS). An overview of the upcoming US dollar currency bearish is going. The green currency has had its worst week since last March, amid signs that Federal Reserve currency printing could take place to boost the economy after Tuesday’s election.

The US government is potentially divided with the Republican Party controlling the Senate. This could mean that the value of the fiscal stimulus package will be less than what is needed.

Major US television networks declared on Saturday that Democrat Joe Biden won the US presidential election. The info offers some reassurance after days of a flood of conflicting reports about who might run the White House over the next four years.

Renewed concerns arise over problems that have dragged the dollar lower during 2020. Some investors are concerned about the US dollar’s status as the world’s dominant reserve currency, including expectations of the lowest interest rate and the US government’s hefty spending in years. come.

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The US currency is down about 10% from this year’s high and is nearing its lowest in more than two years. That decline has supported rising prices for dollar alternative assets, such as gold and bitcoin, which are up 4% and 12% respectively so far this month.

“If you have to write a guide that will get people to say I need an alternative to the dollar then this whole process fits into that story,” said Kit Juckes, a strategist at Societe Generale.

Fed Chair Jerome Powell said on Thursday that the central bank is committed to keeping bond purchases steady at $ 120 billion a month. But once he said lawmakers would probably need to provide more fiscal stimulus to help the economy recover from this year’s contraction.

The burden of recovering the economy could shift to the Fed if the fiscal stimulus package is delayed or smaller than needed, some investors said.

“The Fed can surprise us,” said Jack McIntyre, fixed income portfolio manager at Brandywine Global. “They can do a lot to provide liquidity to the market, to reduce the risk of solvency that would arise if we don’t get the fiscal package.”

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A weaker US dollar is likely to be welcomed by many US companies because it will make the products of multinational companies cheaper.

The euro has strengthened about 6% against the dollar this year, while the Japanese yen is up about 5%.

Momtchil Pojarliev, head of currencies at BNP Asset Management, believes the dollar will slide to fresh lows over the next three months.

“The Fed is very dovish and will remain dovish,” he said. “The bigger the stimulus, the worse it is for the dollar.”

Some disagree with the bearish sentiment against the dollar. John Floyd, head of macro strategy at Record Currency Management, argues that while the Fed said it would keep asset purchases at current levels, the European Central Bank recently signaled it will increase its economic support in December.

“That’s a big difference,” he said.

(Reporting by Gertrude Chavez-Dreyfuss in New York and Sujata Rao in London; Additional writing and reporting by Ira Iosebashvili; Editing by Rosalba O’Brien and Paul Simao)