Narrow Biden election win over Trump dims hope of more US coronavirus stimulus

Name: US coronavirus: Wisconsin residents queue for hours to get Covid-19 tests as infection rate soars
Uploaded: 2020-11-10T13:15:08.000Z
Duration: 1 min 40 s
Description: US coronavirus: Wisconsin residents queue for hours to get Covid-19 tests as infection rate soars

A ‘blue wave’ election giving Democrats control of the White House and Congress did not occur, and Republicans are unlikely to support a new aid package

The Federal Reserve might have to step in with further monetary easing, putting pressure on the US dollar and boosting confidence in the yuan

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The renminbi could be one of the biggest winners in the US election after the Democratic Party appeared to fall short of taking control of all three branches of the federal government, tempering hopes for another fiscal support package and potentially putting further pressure on the US dollar. Photo: Reuters

Neal Kimberley

Published: 9:15pm, 10 Nov 2020Updated: 10:18pm, 10 Nov 2020

The loser of last week’s US elections is likely to be the US dollar. A winner might prove to be the Chinese yuan.

If markets can be sure of anything at the moment, it is that the US Federal Reserve will keep monetary policy ultra accommodative. Markets may even reason that US monetary policy settings may have to become even looser as political divisions in Washington complicate the chances of an agreement on fiscal stimulus.

In the run-up to Inauguration Day on January 20, the US dollar may prove to be the real loser from last week’s US presidential and congressional elections.

As it stands, and setting politics aside, the Covid-19 pandemic still afflicts the United States. Reacting to the economic impact of the earlier stages of the pandemic, the Fed eased monetary policy with the result that the US economy has bounced back somewhat appreciably in recent months.

The Fed kept US monetary policy unchanged last Thursday. However, judiciously steering clear of politics, chair Jerome Powell made the point that although the US economy is still growing, “I would not say that anybody is feeling comfortable about this”.

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US coronavirus: Wisconsin residents queue for hours to get Covid-19 tests as infection rate soars

As Powell said, the coronavirus “has not gone away”. He also made the point that the US economic recovery would be helped along if the White House and Congress could agree on an additional fiscal support package.