USD/JPY Will See Hastened Decline amid Pending Election Results

WikiFX News (6 Nov.) - The results of the presidential election are still pending on Thursday. In the trading market, US stocks climbed over 1%, while the JPY unexpectedly gained strength at the expense of the dollar index. The USD/JPY pair may see its decline hastened.

The election picture remained unchanged on Thursday, with Biden sitting on a stack of 264 votes, just six away from victory, compared to Trump's 214. Thus Biden just needs one more battleground state to win the White House.

Although Trump's campaign filed lawsuits successively in Michigan, Pennsylvania, and Georgia, the latest news shows judges in Georgia and Michigan have dismissed them.

Uncertainties in the election have led to market volatility, pushing the DXY to hit a nearly two-month low of 92.44. At the same time, the unexpected strength gained in JYP may come from the market forecast that fiscal stimulus measures can hardly be on track amid the possible stalemate between the House and Senate.

Despite the rising US stocks, the yield on the 10-year Treasury has once fallen to 0.75%, which indicates that the risk aversion is still lingering over the market. Such a fall will further shrink the narrow spreads between US treasuries and Japanese government bonds, weighing on the USD/JPY pair.

According to the following chart, the price of USD/JPY has breached below the key support at 104 for three months. A deeper loss thus is expected in future trading.

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Chart: Trend of USD/JPY