· Dollar climbs, Mexican peso dives as U.S. presidential race too close to call
The U.S. dollar jumped and risk-sensitive currencies weakened on Wednesday as early results in the U.S. presidential election showed a very tight race, prompting a wind-back of bets on a victory by Democratic challenger Joe Biden.
President Donald Trump, who has so far trailed in polls, has maintained a slim lead in key battleground state of Florida, with the Chinese yuan and Mexican peso hit hardest by the specter of four more years of his aggressive trade policy.
The Mexican peso fell almost 4% at one point and last traded at 20.905 per dollar, down almost 3% while the offshore Chinese yuan fell 0.8% to 6.7362 to the dollar, hitting one-month low at one point.
Among major currencies, the euro fell 1% to a low not seen since late July and last stood at $1.1624, down 0.82% on day.
The Australian dollar lost 0.6% to $0.7128 while the British pound dropped 0.6% to $1.2983. The Canadian dollar fell 0.65% to C$1.3218 per U.S. unit. All of them sank more than one percent at one point.
The Japanese yen also gave up 0.65% to 105.195 per dollar.
Trump was narrowly leading Biden in Florida, while other competitive swing states that will help decide the election outcome, such as Georgia and North Carolina, remained up in the air.
That undercut expectations in markets this week that Biden will likely win the presidency and adopt a large stimulus to support the economy.
“If Biden won Florida, he was almost certain to win the entire race but uncertainties seem high and we are seeing a correction in risk-on trades,” said Yujiro Goto, head of FX strategy at Nomura Securities.
The dollar index measuring the greenback against a basket of currencies gained 0.7% to 94.202.
Investors were increasingly braced for the possibility that the election results may not become clear on Wednesday, with markets hedging against the risk of a contested election or a potentially drawn out process as mail in ballots were counted.
Analysts at Morgan Stanley have said if the results are too close to call by 12pm EST on Wednesday (0500 GMT on Thursday), it will likely be too close to call for several days beyond that.
· Trump tries to claim victory even as ballots are being counted in several states
President Donald Trump falsely claimed early Wednesday that he had won the presidential election, even though millions of legitimate votes had yet to be counted and a half-dozen battleground states were still not called.
“A very sad group of people is trying to disenfranchise [people who voted for me] and we won’t stand for this,” Trump told supporters in the White House shortly before 2:30 a.m.
More than an hour earlier, Democrat Joe Biden told supporters he’s confident about winning the presidential election and urged Americans to be patient.
· Biden urges patience with vote count, says he’s on track to win
· No winner has been declared yet
Millions of votes are still to be counted, including in key battleground states
· Don’t expect a call in the presidential race election night as Michigan, Pennsylvania, Wisconsin process votes
· Biden would want the U.S. to rejoin Trans-Pacific Partnership, leading China watcher says
But President Donald Trump pulled the U.S. out of the TPP in 2017, leaving the remaining 11 countries to renegotiate and sign the Comprehensive and Progressive Agreement for Trans-Pacific Partnership or CPTPP in March 2018.
In its original form, the TPP would have put around 40% of the world economy on the side of the U.S. — compared with China’s share of 18% or 20% of global GDP, said Graham Allison, Harvard University’s Douglas Dillon professor of government.
Biden, who backed the TPP as Obama’s vice president, has reportedly said he would renegotiate the trade deal if he’s elected. He had also told think tank Council on Foreign Relations that while the TPP wasn’t a perfect deal, it was a good way for countries to come together “to curb China’s excesses.”
· UK heading for double-dip recession this winter: PMI
Britain looks on course to enter a double-dip recession this winter, as business surveys show economic growth almost halted last month even before the latest England-wide lockdown was announced, financial data company IHS Markit said.
The IHS Markit/CIPS services Purchasing Managers’ Index (PMI) fell to a four-month low of 51.4 in October from 56.1 in September, closer to the 50 mark that represents zero growth than an initial reading of 52.3.
· France records most Covid-related deaths in 24 hours since April
France has reported its highest daily tally of Covid-linked deaths since April 15, according to data released by the French Health Authority on Tuesday.
A further 854 people died from illnesses related to the virus in the past 24 hours -- an average of one person dying every 1 minute 41 seconds. That brings the country's death toll to 38,289.
The health authority also registered 36,330 new cases in the past 24 hours, taking France's total number of infections to more than 1.5 million.
· China says its importers choosing voluntarily to cut back on Australian goods
· China’s service sector recovery strengthens in October, hiring picks up: Caixin PMI
The recovery in China’s service sector activity extended into a sixth straight month in October, an industry survey showed on Wednesday, with hiring picking up to the highest level in a year but overseas demand slipping.
The Caixin/Markit services Purchasing Managers’ Index (PMI) rose to 56.8 from September’s 54.8, the highest reading since June and staying well above the 50-mark that separates monthly growth from contraction.
The services sector, which accounts for about 60% of the economy and half of urban jobs, had initially been slower to return to growth than large manufacturers, but the recovery has gathered pace in recent months.
· Oil climbs as U.S. stockpiles shrink, but election uncertainty overshadows market
Oil rose around 2% on Wednesday after industry data showed crude inventories in the United States fell sharply, but trading was choppy as the outcome of the U.S. presidential election remained unclear.
West Texas Intermediate was up 80 cents, or 2.1%, at $38.46 a barrel by 0436 GMT, after trading in a nearly $1 range. Brent crude was up 80 cents, or 2%, at $40.51, after trading between $39.85 and $40.70.
Oil prices fell more than 10% last week as global coronavirus cases soared and more restrictions on movement hit demand prospects. U.S. oil has nearly recouped
Reference: Reuters, CNBC, The Guardian
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