B dollar forex capital

A balance of payment is a statement of all transactions made between entities in one country and the rest of the world over a specific time frame, such as a quarter or a year.

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How Does the Balance of Payments Impact Currency Exchange Rates, b dollar forex capital.

Two dynamics are in play which link a country's balance of payment and changes in the value of its currency: the market for all financial transactions on the international market (balance of payments) and the supply and demand for a specific currency (exchange rate). As more U.S. Dollars are demanded to satisfy the needs of foreign investors or consumers, upward pressure is placed on the price of U.S. Dollars. Put another way: it costs relatively more to exchange for U.S. Dollars, in terms of foreign currencies.

How does the balance of payments impact currency exchange rates?

A change in a country's balance of payments can cause fluctuations in the exchange rate between its currency and foreign currencies. The reverse is also true when a fluctuation in relative currency strength can alter balance of payments.

Balance of payments and exchange rates

A balance of payment is a statement of all transactions made between entities in one country and the rest of the world over a specific time frame, such as a quarter or a year. Two dynamics are in play which link a country's balance of payment and changes in the value of its currency: the market for all financial transactions on the international market (balance of payments) and the supply and demand for a specific currency (exchange rate).

Key takeaways

Balance of payments is the statement of a country's trade with other nations.

The relationship between balance of payments and exchange rates under a floating-rate exchange system will be driven by the supply and demand for the country's currency and all transactions taking place with other countries.

Suppose a consumer in france wants to purchase goods from an american company. The american company is not likely to accept euros as payment. It wants U.S. Dollars. Somehow the french consumer needs to purchase U.S. Dollars (ostensibly by selling euros in the forex market) and exchange them for the american product. Today, most of these exchanges are automated through an intermediary, so that the individual consumer doesn't have to enter the forex market to make an online purchase. After the trade is made, it is recorded in the current account portion of the balance of payments.

The same holds true for investments, loans or other capital flows. American companies normally do not want foreign currencies to finance their operations, thus their expectation is for foreign investors to send them dollars. In this scenario, capital flows between countries show up in the capital account portion of the balance of payments.

As more U.S. Dollars are demanded to satisfy the needs of foreign investors or consumers, upward pressure is placed on the price of U.S. Dollars. Put another way: it costs relatively more to exchange for U.S. Dollars, in terms of foreign currencies.

Special considerations

The exchange rate for U.S. Dollars may not rise if other factors are concurrently weighing it down. For example, an expansionary monetary policy might increase the supply of U.S. Dollars and decrease its value relative to other currencies.

The relationship between balance of payments and exchange rates described here exists only under a free or floating exchange rate regime. The balance of payments does not impact the exchange rate in a fixed-rate system, because central banks adjust currency flows to offset the international exchange of funds. The world has not operated under any single rules-based or fixed exchange-rate system since the end of bretton woods in the 1970s.

Dems win georgia senate elections; what that means US dollar and CNH

The result of the georgia senate elections could result in 2 very different moves for the US dollar over the next year.

On monday, we discussed the potential outcomes of the georgia senate races and what it means for the US dollar. With democratic candidates raphael warncok and jon ossoff winning the elections, the senate is now split 50/50, which means any votes in the senate that are tied will be decided by vice president-elect harris. This will give democrats control of the house of representatives, the senate, and the white house. In the short-term, the US dollar should continue lower. President-elect joe biden is looking to increase coronavirus stimulus, working with congress to grant eligible US citizens $2,000 in direct aid vs the current $600. However, could this news already be priced in? Today’s early price action would have you think so. In the longer-term, his proposals to increase taxes many result in pushing the US dollar index (DXY) higher.

With the news of the unofficial democrat winners, one would expect the S&P 500 raging higher today and the DXY would be lower. However, BOTH stocks and the US dollar are higher. The DXY was lower overnight, so this appears to be a potential short squeeze as the market has been heading lower over the last few months. On a short-term 60-minute timeframe, the DXY has been in a descending wedge since friday. Today, the index broke out of the top of the wedge and is near its target and horizontal resistance at 89.86. Sellers will be looking to take advantage of this pop to add to their position. The next resistance level is 90.00. Short-term support is at the downward sloping trendline of the wedge near 89.45.

Argentina imposes currency controls to support economy

Argentina has imposed currency controls in an attempt to stabilise markets as the country faces a deepening financial crisis.

The government will restrict foreign currency purchases following a sharp drop in the value of the peso.

Firms will have to seek central bank permission to sell pesos to buy foreign currency and to make transfers abroad.

Argentina is also seeking to defer debt payments to the international monetary fund (IMF) to deal with the crisis.

What has the government said?

In an official bulletin issued on sunday, the government said that it was necessary to adopt "a series of extraordinary measures to ensure the normal functioning of the economy, to sustain the level of activity and employment and protect the consumers".

The central bank said the measures were intended to "maintain currency stability".

It also said that while individuals can continue to buy US dollars, they will need to seek permission to purchase more than $10,000 (ВЈ8,223.50) a month.

The measures will apply until the end of this year.

What triggered the current crisis?

Argentina has been struggling with a financial crisis, which was exacerbated by the president's defeat in a recent primary poll.

The peso fell to a record low last month after the vote showed that the business-friendly government of president mauricio macri is likely to be ousted in elections in october.

Mr macri was elected in 2015 on promises to boost argentina's economy with a raft of liberal economic reforms.

But the country is in a deep recession. It has one of the world's highest inflation rates, running at 22% during the first half of the year.

Argentina's economy contracted by 5.8% in the first quarter of 2019, after shrinking 2.5% last year. Three million people have fallen into poverty over the past year.

How is the move likely to be received?

Ordinary argentines have traditionally had little faith in their own currency, preferring to convert their spare pesos into dollars as soon as they can.

They don't trust financial institutions much either, so they resort to what is locally known as the "colchгіn bank" - that is, stuffing their dollars under the mattress.

Anecdotal stories abound of people keeping money buried in the garden, hidden in the walls or even stuffed in heating systems - occasionally with disastrous consequences if there is an unexpected cold snap.

When you consider argentina's history of rampant inflation and currency volatility, they arguably have a point.

But it does mean that any restrictions on people's ability to buy dollars have an enormous psychological impact.

How does this compare with previous crisis measures?

The $10,000 ceiling for dollar transactions is certainly generous in comparison with past actions.

People still have bad memories of the "corralito", imposed in 2001, which stopped all withdrawals of dollars from bank accounts for a whole year.

The only serious attempt to wean argentines off their dollar dependency dates back to the 1990s under president carlos menem, when the peso's value was fixed by law at parity with the dollar.

But that put the financial system under severe strain, leading to the economic meltdown of 2001-02.

How bad can argentina's crisis get?

The country is struggling to stave off its fifth debt default in 30 years.

Last week, it said it would seek to restructure its debt with the IMF by extending its maturity. This would give the country more time to pay back the money it owes to the IMF.

Rating agencies, including standard & poor's and fitch, decided that amounted to a default and downgraded the country's credit ratings.

Whatever happens in argentina, the risk of financial contagion is low, say analysts.

Even in the rest of latin america, markets are unlikely to suffer. The US-china trade war and the slowdown in global growth are much more of a threat.

How will this affect argentina's forthcoming election?

The move will probably help to slow down the depletion of argentina's foreign currency reserves in the run-up to the presidential election in october.

But it is a policy reversal for mr macri, who lifted capital controls in december 2015.

This sets "a worrying precedent", according to edward glossop, latin america economist at capital economics.

Left-wing candidate alberto fernandez, the likely victor of next month's vote, has advisers who are sympathetic to capital controls, he said.

"the fact that these have now been introduced by president macri could make it easier for mr fernandez to justify using them in the longer term," he added.

How much trading capital do forex traders need?

Accessibility in the forms of leverage accounts—global brokers within your reach—and the proliferation of trading systems have promoted forex trading from a niche trading audience to an accessible, global system.

However, the amount of capital traders have at their disposal will greatly affect their ability to make a living. A trader's ability to put more capital to work and replicate advantageous trades is what separates professional traders from novices. Just how much capital a trader needs, however, differs vastly.

Key takeaways

Traders often enter the market undercapitalized, which means they take on excessive risk to capitalize on returns or salvage losses.

Leverage can provide a trader with a means to participate in an otherwise high capital requirement market.

The leverage a trader requires varies, but if a trader is making consistent trades, the leverage required is simply enough that the trader is able to profit without taking unnecessary risks.

Considering leverage in forex trading

Leverage offers a high level of both reward and risk. Unfortunately, the benefits of leverage are rarely seen. Leverage allows the trader to take on larger positions than they could with their own capital alone, but impose additional risk for traders that do not properly consider its role in the context of their overall trading strategy.

Best practices would indicate that traders should not risk more than 1% of their own money on a given trade. While leverage can magnify returns, it's prudent for less-experienced traders to adhere to the 1% rule. Leverage can be used recklessly by traders who are undercapitalized, and in no place is this more prevalent than the foreign exchange market, where traders can be leveraged by 50 to 400 times their invested capital.

A trader who deposits $1,000 can use $100,000 (with 100 to 1 leverage) in the market, which can greatly magnify returns and losses. This is considered acceptable as long as only 1% (or less) of the trader's capital is risked on each trade. This means that with an account size of $1,000, only $10 (1% of $1,000) should be risked on each trade.

While difficult in practice, traders should avoid the temptation of trying to turn their $1,000 into $2,000 quickly. It may happen, but in the long run, the trader is better off building the account slowly by properly managing risk.

Respectable performance for forex traders

Every trader dreams of becoming a millionaire by making intelligent bets off of a small amount of capital. The reality of forex trading is that it is unlikely to make millions in a short timeframe from trading a small account.

While profits can accumulate and compound over time, traders with small accounts often feel pressured to use large amounts of leverage or take on excessive risk in order to build up their accounts quickly. When factoring fees, commissions and/or spreads into return expectations, a trader must exhibit skill just to break even.

Simply being profitable is an admirable outcome when fees are taken into account. However, if an edge can be found, those fees can be covered and a profit will be realized. A trader that averages one tick per trade erases fees, covers slippage and produces a profit that would beat most benchmarks.

Are you undercapitalized for making a living in forex trading?

The high failure rate of making one tick on average shows that trading is quite difficult. Otherwise, a trader could simply increase their bets to five lots per trade and make 15% per month on a $50,000 account. Unfortunately, a small account is significantly impacted by the commissions and potential costs mentioned in the section above. I

N contrast, a larger account is not as significantly affected and has the advantage of taking larger positions to magnify the benefits of day trading. A small account by definition cannot make such big trades, and even taking on a larger position than the account can withstand is a risky proposition due to margin calls.

If the goal of day traders is to make a living off their activities, trading one contract 10 times per day while averaging a one-tick profit may provide an income, but is not a livable wage when factoring other expenses.

There are no set rules on forex trading—each trader must look at their average profit per contract or trade to understand how many are needed to meet a given income expectation, and take a proportional amount of risk to curb significant losses.

The minimum capital required to start day trading forex

Martin child / getty images

It's easy to start day trading currencies because the foreign exchange (forex) market is one of the most accessible financial markets. Some forex brokers require a minimum initial deposit of only $50 to open an account and some accounts can be opened with an initial deposit of $0.

And unlike the stock market, for which the securities and exchange commission requires day traders to maintain an account with $25,000 in assets, there is no legal minimum amount required for forex trading.

But just because you could start with as little as $50 doesn't mean that's the amount you should start with. You may want to consider some scenarios involving the potential risks and rewards of various investment amounts before determining how much money to put in your forex trading account.

Risk management

Day traders shouldn't risk more than 1% of their forex account on a single trade. You should make that a hard and fast rule. That means, if your account contains $1,000, then the most you'll want to risk on a trade is $10. If your account contains $10,000, you shouldn't risk more than $100 per trade.

Even great traders have strings of losses; if you keep the risk on each trade small, a losing streak can't significantly deplete your capital. Risk is determined by the difference between your entry price and the price at which your stop-loss order goes into effect, multiplied by the position size and the pip value.

Pip values and trading lots

The forex market moves in pips. Let's say the euro-U.S. Dollar (EUR/USD) currency pair is priced at 1.3025. That means the value of one euro, the first currency in the pair, which is known as the base currency, is $1.3025.

For most currency pairs, a pip is 0.0001, which is equivalent to 1/100th of a percent. If the EUR/USD price changes to 1.3026, that's a one pip move. If it changes to 1.3125, that's a 100 pip move. An exception to the pip value "rule" is made for the japanese yen. A pip for currency pairs in which is the yen is the second currency—called the quote currency—is 0.01, which is equivalent to 1 percent.

Forex pairs trade in units of 1,000, 10,000 or 100,000, called micro, mini, and standard lots.

When USD is listed second in the pair, as in EUR/USD or AUD/USD (australian dollar-U.S. Dollar), and your account is funded with U.S. Dollars, the value of the pip per type of lot is fixed. If you hold a micro lot of 1,000 units, each pip movement is worth $0.10. If you hold a mini lot of 10,000, then each pip move is $1. if you hold a standard lot of 100,000, then each pip move is $10. Pip values can vary by price and pair, so knowing the pip value of the pair you're trading is critical in determining position size and risk.

Stop-loss orders

When trading currencies, it's important to enter a stop-loss order in case the value of the base currency goes in the opposite direction of your bet. A simple stop-loss order would be 10 pips below the current price when you expect the price to rise or 10 pips above the current price when you expect the price to fall.

Capital scenarios

$100 in the account

Assume you open an account for $100. You will want to limit your risk on each trade to $1 (1% of $100).

If you place a trade in EUR/USD, buying or selling one micro lot, your stop-loss order must be within 10 pips of your entry price. Since each pip is worth $0.10, if your stop loss were 11 pips away, your risk would be $1.10 (11 x $0.10), which is more risk than you want.

You can see how opening an account with only $100 severely limits how you can trade. Also, if you are risking a very small dollar amount on each trade, by extension you're going to be making only small gains when you bet correctly. To make bigger gains—and possibly derive a reasonable amount of income from your trading activity—you will require more capital.

$500 in the account

Now assume you open an account with $500. You can risk up to $5 per trade and buy multiple lots. For example, you can set a stop loss 10 pips away from your entry price and buy five micro lots and still be within your risk limit (because 10 pips x $0.10 x 5 micro lots = $5 at risk).

Or if you choose to place a stop loss 25 pips away from the entry price, you can buy two micro lots to keep the risk on the trade below 1% of the account. You would buy only two micro lots because 25 pips x $0.10 x 2 micro lots = $5.

Starting with $500 will provide greater trading flexibility and produce more daily income than starting with $100. But most day traders will still be able to make only $5 to $15 per day off this amount with any regularity.

$5,000 in the account

If you start with $5,000, you have even more flexibility and can trade mini lots as well as micro lots. If you buy the EUR/USD at 1.3025 and place a stop loss at 1.3017 (eight pips of risk), you could buy 6 mini lots and 2 micro lots.

Your maximum risk is $50 (1% of $5,000), and you can trade in mini lots because each pip is worth $1 and you've chosen an 8 pip stop-loss. Divide the risk ($50) by (8 pips x $1) to get 6.25 for the number of mini lots you could buy without exceeding your risk. You would break up 6.25 mini lots into 6 mini lots (6 x $1 x 8 pips = $48) and 2 micro lots (2 x $0.10 x 8 pips = $1.60), which puts a total of only $49.60 at risk.

With this amount of capital and the ability to risk $50 on each trade, the income potential moves up, and traders can potentially make $50 to $150 a day, or more, depending on their forex strategy.

Recommended capital

Starting out with at least $500 gives you flexibility in how you can trade that an account with only $100 in it does not have. Starting with $5,000 or more is even better because it can help you produce a reasonable amount of income that will compensate you for the time you're spending on trading.

Economic factors that affect the forex market

Forex is a real global marketplace, with buyers and sellers from all corners of the globe participating in trillions of dollars of trades each day. the fact that foreign exchange trading has become such a global activity means that macroeconomic events everywhere play a greater role in forex than ever before. Traders don't have to stick to popular currencies anymore, but they are a good place to start. Below, we'll discuss some economic trends and events that will help those who are new to the market to become successful forex traders.

Key takeaways

Macroeconomic statistics, such as inflation, have the greatest impact on forex markets.

Stock, bond, commodity, and other capital markets also have a strong influence on exchange rates.

International trade numbers, such as trade deficits and surpluses, play a vital role in forex markets.

Political news can also be important for forex traders, especially when unexpected outcomes occur.

The role of macroeconomics in forex

The forex market is primarily driven by overarching macroeconomic factors. These factors influence a trader's decisions and ultimately determine the value of a currency at any given point in time. The economic health of a nation's economy is a primary factor in the exchange rate of its currency. Overall economic health can change quickly based on current events and new information. However, most of the best forex traders are highly disciplined and stick to a set of trading rules. Let's take a closer look at some of the factors that influence an economy's standing and drive changes in the value of its currency.

Currency markets are incredibly complex, so no specific set of factors will ever completely determine exchange rates. Expect the unexpected.

Capital markets and forex

The global capital markets are perhaps the most visible indicators of an economy's health. It is easy to notice the release of public information in capital markets. There is a steady flow of media coverage and up-to-the-second information on the dealings of corporations, institutions, and government entities. A rally or sell-off of securities originating from one country or another should be a clear signal that the future outlook for that economy has changed.

Similarly, many economies are sector-driven, such as canada's commodity-based market. The canadian dollar is heavily correlated with commodities, such as crude oil and metals. A rally in oil prices would likely lead to the appreciation of the canadian dollar relative to other currencies. Commodity traders, like forex traders, rely heavily on economic data for their trades. In many cases, the same data will have a direct impact on both markets. Trading currency and commodity correlations is a fascinating topic.

The bond markets are similarly critical to what is happening in the forex market since both fixed-income securities and currencies rely heavily on interest rates. Treasury price fluctuations are a factor in the movements of exchange rates, which means that a change in yields will directly affect currency values. Therefore, it is essential to understand bonds, and especially government bonds, to excel as a forex trader.

International trade and forex

Another critical factor is the balance of trade between nations. The trade balance serves as a proxy for the relative demand for goods from a country. A nation with products or services that are in high demand internationally will typically see an appreciation of its currency. For example, buyers must convert their money into australian dollars if they want to purchase goods from australia. The increased demand for the australian dollar will put upward pressure on its value.

On the other hand, countries with large trade deficits are net buyers of international goods. More of their currency is sold to purchase the currency of other nations to pay for foreign goods. This type of situation is likely to have a negative impact on the value of an importing country's currency.

Political news and forex markets

The political landscape plays a vital role in the overall outlook for a country and, consequently, the perceived value of its currency. Forex traders are constantly monitoring political news and events to anticipate changes in the economic policies of national governments. These can include shifts in government spending and adjustments in regulations imposed on particular sectors or industries. Changes in rules regarding margin or leverage available to traders often have a dramatic impact on markets.

Elections with uncertain outcomes are always significant events for currency markets. Exchange rates often react favorably to wins by pro-growth or fiscally responsible parties. A referendum can also have a substantial impact on exchange rates. A good example is the brexit vote, which had a dramatic effect on the british pound when the U.K. Voted to leave the EU.

The fiscal and monetary policies of any government are the most critical factors in its economic decision making. Central bank decisions that impact interest rates are keenly watched by the forex market for any changes in key rates or the future outlook of policymakers.

Economic statistics and forex

Economic reports are the backbone of a forex trader's playbook. Maintaining an economic report calendar is crucial to staying current in this fast-paced marketplace. Gross domestic product (GDP) may be the most visible economic statistic, as it is the baseline of a country's economic performance and strength. GDP measures the total output of goods and services produced within an economy. However, it is crucial to remember that GDP is a lagging indicator. That means it reports on events and trends that have already occurred.

Inflation is also a significant indicator, as it sends a signal of increasing price levels and falling purchasing power. However, inflation is a double-edged sword. Many view it as placing downward pressure on a currency due to retreating purchasing power. Inflation can also lead to currency appreciation, as it may force central bankers to increase rates to curb rising inflation levels. Inflation is a hotly-contested issue among economists, and its effects on currencies are rarely straightforward.

Employment levels, retail sales, manufacturing indexes, and capacity utilization also carry important information on the current and predicted strength of an economy and its currency. They can provide confirmation for the primary factors we've outlined above.

The bottom line

The forex market is ultimately driven by economic factors that impact the value and strength of a nation's currency. The economic outlook for a country has the most influence on the value of its currency. Knowing the factors and indicators to watch will help you keep pace in the competitive and fast-moving world of forex.

FOREX-dollar drops on democrat gains in U.S. Senate election

* dollar index hits lowest since april 2018

* euro hits new 2018 high versus dollar

* bitcoin trades above $35,000

* graphic: world FX rates in 2020 tmsnrt.Rs/2RBWI5E

LONDON, jan 6 (reuters) - the dollar hit its lowest level in nearly three years on wednesday with markets pricing in a democrat win in the U.S. Senate election in georgia that would pave the way for a larger fiscal stimulus package and fuel currency market risk appetite.

Democrats had won one hotly contested U.S. Senate race in georgia and pulled ahead in the second by 0900 GMT, edging closer to control of the chamber.

Analysts generally assume a democrat-controlled senate would be positive for economic growth globally and thus for most riskier assets, but negative for bonds and the dollar as the U.S. Budget and trade deficits swell even further.

The dollar index hit its lowest since april 2018 as european markets opened, having slipped gradually overnight. At 0901 GMT it was at 89.387, down 0.1% on the day.

The dollar also fell to its lowest in six years versus the swiss franc, at 0.8761.

The euro was up 0.2% at $1.2326, having rose past major resistance to hit as high as $1.2346 in early european trading .

“we had not assumed democrat victories in these elections and hence some revisions weaker to the extent of USD weakness we expect this year may be warranted,” derek halpenny, head of research at MUFG, wrote in a note to clients.

“we currently tentatively are targeting 1.2800 for EUR/USD by year-end,” he added.

But elsa lignos, global head of FX strategy at RBC capital markets said that she disagreed with the market consensus that U.S. Fiscal stimulus is “risk-on” and therefore dollar-negative.

Instead, she said, big infrastructure spending in the U.S. Would strengthen the dollar, particular against non-commodity producing developed market currencies.

Riskier currencies also surged, with the new zealand dollar and australian dollar hitting their highest since 2018 and holding onto these gains in the european session .

The move was helped by a range of surveys overnight showing that manufacturing globally had proved resilient in december, despite escalating virus cases.

A decisive outcome in georgia could arrive as soon as wednesday morning in the united states, although the tightness of the count suggests an official result may take longer.

“the current quiet on the FX market might just be the quiet before the storm,” wrote ulrich leuchtmann, head of FX and commodity research at commerzbank. He said that market participants will have learned from the presidential election in november that it can take a few days to get the final result.

“USD side is not going to provide any momentum until the result is sufficiently clear,” he said.

“as soon as first market participants begin betting on one side or the other (republican USD positive or democrat USD negative) others are likely to jump on the bandwaggon.”

Elsewhere, U.S. President donald trump escalated tensions with beijing by signing an executive order banning U.S. Transactions with eight chinese software applications.

After surging on monday and tuesday, the yuan softened, after china’s central bank appeared to signal a preference for a more moderate pace of intervention.

The yuan has gained around 10% on the dollar since last may as china’s economic rebound has led the world’s pandemic recovery .

Bitcoin traded above $35,000 for the first time, rising to $35,879 in the asian session and extending a rally that has seen it rise more the 800% since mid-march.

These gains waned as european markets opened, with bitcoin at $34,156.11 at 0915 GMT.

Reporting by elizabeth howcroft; editing by alexander smith

US dollar sank on biden election lead, capital to flow into emerging markets?

US dollar, singapore dollar, indonesian rupiah, malaysian ringgit, philippine peso – talking points

The US dollar sank against ASEAN currencies on election count

How might a joe biden administration impact emerging markets?

ASEAN data: philippine GDP for PHP, malaysian GDP for MYR

US dollar ASEAN weekly recap

The US dollar sank against its ASEAN counterparts such as the singapore dollar, indonesian rupiah, malaysian ringgit and philippine peso this past week. This is as it became increasingly clear that democratic nominee joe biden could win the presidential election against incumbent donald trump. Global market sentiment improved, with wall street finishing off the best week since early april.

Last week’s US dollar performance

*ASEAN-based US dollar index averages USD/SGD, USD/IDR, USD/MYR and USD/PHP

External event risk – post US election uncertainty, stimulus, EU-US tariffs?

A joe biden presidency for the next 4 years would mean a major shift away from the current administration’s approach to foreign policy. A signature of trump’s external strategy is his trade war, particularly with china, which contributed to the slowdown in global growth before the coronavirus pandemic. A cooldown in tensions between the two economic powerhouses would be a sigh of relief for general market sentiment.

As a result, capital poured back into emerging markets this past week – see chart below. The MSCI emerging markets index (EEM) closed at its highest in over 2 years. With that said, the path forward contains some elements of uncertainty. President donald trump has filed lawsuits in key battleground states to challenge vote tallies. Expect some elements of volatility until these are settled.

Going forward, all eyes remain on the direction the nation is heading with more fiscal aid. A divided government is likely, with georgia’s senate race in a runoff. The composition of the upper chamber of the united states congress will likely be unknown until early january. Senate majority leader mitch mcconnell, referencing october’s rosy jobs report, hinted at a smaller fiscal package than what democrats are proposing.

A rising risk for sentiment, that could reverse losses in the US dollar, are creeping coronavirus cases locally and externally. Lockdowns were recently reintroduced in parts of europe. The EU is also due to impose $4 billion in WTO-approved retaliatory tariffs against the US on november 10 th for the latter’s aid to boeing co. Trump has hinted at retaliation should these go ahead. The US election has thrown a curveball here however.

Check out dailyfx’s content around this likely volatility-inducing event here .

Forex - dollar gains for now; lira continues to slide

Investing.Com - the dollar pushed higher in early european trade friday, reprising its role as a safe haven amid renewed tensions between the U.S. And china, but gains are likely to be capped by the stalemate in the U.S. Congress over the latest stimulus package ahead of the release of the official monthly jobs report.

At 3:10 AM ET (0710 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was up 0.2% at 92.995, not far removed from thursday's two-year low of 92.483.

Elsewhere, USD/JPY was flat at 105.54, GBP/USD dropped 0.2% to 1.3121, EUR/USD was down 0.3% at 1.1842, despite german and french industrial production both handsomely beating expectations for june. Germany's exports also rose 12.7% on the month in june. The data all point to a considerable rebound in activity at the end of the second quarter.

U.S. President donald trump ratcheted up already-heightened tensions with beijing, and fueled some demand for the dollar, by announcing late thursday that his administration was banning U.S. Transactions with two popular chinese apps, tencent's wechat and bytedance's tiktok.

Tension has been simmering between the two powers for months, with the united states unhappy with china's handling of the novel coronavirus outbreak and moves to curb freedoms in hong kong.

That said, these gains look temporary as sentiment has turned against the greenback due to a combination of rising U.S. Coronavirus infections, a steady decline in treasury yields, and more immediately a lack of consensus in washington over additional fiscal stimulus.

“dollar demand from both the investor and commercial community is in decline and the dollar is no longer the only game in town,” said ING analyst chris turner, in a research note.

U.S. Republicans and democrats have so far failed to reach an agreement on the size and makeup of a new fiscal stimulus package that many think is needed to prevent the U.S. Economy from losing more momentum.

Jobless claims data released thursday still showed over 31 million americans claiming benefits, and the non-farm payrolls release later on friday is expected to show U.S. Job creation slowed in july, with expectations for an increase of 1.6 million jobs in the month, a sharp slowdown from the record 4.8 million in june.

An area the dollar has shown some strength of late is against the turkish lira, with USD/TRY soaring 0.9% to a new record high of 7.3036. The lira is down nearly 20% versus the dollar so far this year, despite the greenback's own problems.

The turkish central bank has delivered 1,575 basis points of interest-rate cuts in nine consecutive steps since july 2019, in attempting to boost growth while driving borrowing costs adjusted for inflation below zero.

With the currency being hit so hard, goldman sachs (NYSE: GS ) now expects 175 points of hikes by year end, estimating that turkey’s central bank has spent $65 billion in the first six months of the year managing its currency.

So, let's see, what we have: take a brief look at the relationship between a nation's balance of payments and the exchange rate value of its currency in the forex markets. At b dollar forex capital