Dollar gained 1% Wednesday. What about other currencies?

 The U.S. dollar surged forward on Wednesday while riskier currencies tumbled down as early results in the presidential election showed a tight race. The reports surprised currency traders who had been betting on a decisive victory for Democrat Joe Biden.

President Donald Trump won in the key battleground states of Ohio, Texas, and Florida. Therefore, crushing market hopes for a clear win. Traders are waiting to see whether Trump will retain the Rust Belt states – Wisconsin, Michigan, and Pennsylvania, as they sent him to the White House in 2016.

Meanwhile, the greenback soared by 1% as European markets opened. The offshore-traded Chinese yuan, Norwegian crown, and Australian dollar, which have borne the brunt of Trump’s protectionist policies for years, plummeted.

Chris Turner, the global head of markets at ING, stated that thus far one of the few things remaining clear is that there won’t be a Democratic landslide win as polls had insinuated. However, that has wrong-footed the currency market.

The dollar was higher by approximately 1% against a basket of currencies at last, after earlier hitting its highest level in more than a month. Before that, the greenback had fallen to a one-week low on Tuesday due to expectations of a win for Biden.

Salman Ahmed, the head of the macro and strategic allocation at Fidelity International, stated that the Forex market saw the dollar come under pressure going into the election. And now, it is seeing an unwind of that.

While investors expected Biden’s victory to boost prospects for a large U.S. fiscal aid package, they also thought it would lessen the trade war tensions which have supported the dollar.

How did the Euro fare?

The euro tumbled down by 0.7% at $1.1637, reaching its lowest level in more than three months. Meanwhile, the sterling plummeted down by 1% on Wednesday.

Furthermore, the increasing likelihood of a Trump re-election pressured currencies that have been hardest hit by his trade policies. Among them were the Mexican peso and the Chinese yuan. They dropped down by more than 3% and 0.7%, respectively.

Millions of votes remain uncounted. Despite that, President Donald Trump falsely stated that he had won the election. At the same time, his rival, Biden, announced that he was confident of winning. However, that will not be decided until all of the states complete counting votes over the next hours or days.

Overnight volatility gauges for dollar-yen and euro-dollar dropped down as traders waited for clarity. Before lowering, they had rallied to their highest levels since March earlier this week.