- The US dollar index declined to September lows as Joe Biden extended his lead against Trump.
- With Republicans expected to retain the Senate, Joe will have difficulties executing his agenda.
- Data from the BLS showed that the economy added more than 638k jobs.
The US dollar index (DXY) declined by more than 0.25%, reaching an intraday low of $92.30, which is the lowest it has been since September 2.
Biden leads Trump
The biggest catalyst for the performance of the dollar index is the presidential results in the United States. According to the Washington Post, Joe Biden has more than 253 votes compared to Donald Trump’s 214.
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In the outstanding states, Biden overtook Trump in Georgia as the gap in Pennsylvania continued to narrow. That means that, unless something dramatic happens, Biden will become the next president of the United States.
At the same time, the released numbers point to Republicans retaining support of the senate, which means that Biden will have an uphill task passing critical bills. For example, he will have difficulties passing a tax reform bill that will increase taxes to the wealthy. Also, he will find challenges in passing his $2 trillion clean energy bill.
Still, there’s a lot he will be able to achieve. For example, he will roll-back some of the regulations that Trump did away with. Also, he will be able to go back to the Paris Climate Accord, Iran nuclear deal, and return the United States to the World Health Organisation (WHO). Most importantly, he will roll-back most of the tariffs that Trump enforced.
The dollar index is also reacting to the nonfarm payroll numbers from the United States. According to the Bureau of Labour Statistics (BLS), the economy added more than 638k jobs in October. That was the seventh straight month that the economy has added jobs after it lost more than 20 million in April. However, it was lower than September’s increase of 660k.
The unemployment rate fell from 7.9% to 6.9%, which is still higher than the pre-pandemic level of 3.4%. Wages rose by 4.5% while the average number of weekly hours increased to 34.8. At the same time, the closely-watched participation rate increased from 61.4% to 61.7%.
Recent economic numbers have shown that the American economy is relatively resilient even as the number of Covid-19 cases continue rising. For example, data released by ISM this week showed that the manufacturing and non-manufacturing PMI remained above 50 in October.
US dollar index technical outlook
On the daily chart below, we see that the dollar index has been under intense pressure lately. In the past few days, it has fallen by more than 2.20, and is now trading at the lowest level since September 2. It is also below the 25-day and 50-day exponential moving averages. Also, it has struggled moving above $94.50, where it formed a double top pattern.
Therefore, with bears in control, it is just a matter of time before it moves below the important support at $91.73. Read our comprehensive guide about how to invest in forex and the best forex brokers to use here.