Major currencies continued their onslaught against the US Dollar as the market continues to price in the USD weakness in the event of a Biden victory in the US elections, which becomes now more and more likely.
Other Emerging Market currencies equally firmed as the greenback hit a two-week low. On a trade-weighted basis, the US Dollar index (DXY) had fallen -1.7% for the week as of Friday, while the South African Rand has been able to amplify USD losses by gaining 3% this week.
The markets remain turbulent, however, and subject to change, as the Rand had to recover after retreating close to the 16.00/US$-barrier.
Nevertheless, risk assets globally were on the front foot, including domestic government bonds and the JSE All Share index, and the ZAR was able to close stronger at 15.77/US$, levels last seen during its March decline. The dollar has steadied during Asian trade on Friday but it remains poised for further downside as the contentious election diminishes prospects for large fiscal spending to support the economy. Investors may trade more conservatively heading into the weekend, however, with every further day allowing the election outcome to unfold the currency will become more jittery.
Please note that US initial jobless claims this week remained stubbornly high and point to a stalling recovery, underscoring the need for further fiscal stimulus to support the economy; not the policy that Biden stands for, but Trump!