By TraderVox.com
Tradervox.com (Dublin) – The US dollar declined against the euro for the second day as speculation US will maintain monetary stimulus rose after Barrack Obama, the US President was re-elected for a second term. The greenback fell against almost all of its most traded counterparts as Associated Press projected that Obama will win with at least 303 electoral votes.
The Australian dollar advanced against the greenback as European and Asian stocks rose boosting demand for riskier assets. After Obam’s win, Michiyoshi Kato, Senior Vice President of Forex Sales in Tokyo at Mizuho Corporate Bank Ltd predicted that the monetary policy in the US will continue to hold hence the dollar will weaken further. He however, noted that the dollar will not stay low for long as there investors will start focusing on fiscal cliff.
The fiscal cliff will involve $600 billion in spending cuts and tax increases unless the Congress acts to stop it from taking effect in 2013. The Fed easing would have had tough times in a Romney administration as he had already expressed his opposition to easing. Romney, who lost the swing states of Virginia, Ohio, New Hampshire, Iowa, Wisconsin, Colorado, and Nevada, had pledged to replace Fed Chairman Ben Bernanke as the Fed Chairman.
According to Junya Tanase, the chief Currency strategist in Tokyo at JPMorgan Chase & Co, the re-election of Obama boosts speculations of continued easing. Tanase added that is easing leads to lower US yields and higher stock prices, the dollar-yen pair will drop. This will complicate matters in Japan where a strong yen has hampered exports.
The US dollar declined against the Australian dollar by 0.3 percent to trade at $1.0470. The Aussie had gained by 0.9 percent against the US currency in the last two days. Euro’s advance against the greenback was tampered as Greece parliament discussed the austerity measures.
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