Dollar stumbles against euro after Obama win

AFP FILE PHOTO

TOKYO – The dollar stumbled against the euro in Asian forex trade after President Barack Obama won a second term following a nail-biter White House race.

The euro bought $1.2860 in Tokyo, up from $1.2788 earlier Wednesday and $1.2814 in New York late Tuesday. The greenback was also weaker against the yen, at 80.05 yen compared with 80.34 yen in New York.

An Obama victory was seen among traders as a dollar-selling cue as it may suggest further easing measures by the US Federal Reserve, after the central bank ushered in a $40 billion monthly bond-buying programme to spur the world’s biggest economy.

“Investors have been factoring in his win and adjusting their positions likewise,” said Kengo Suzuki, forex strategist at Mizuho Securities in Tokyo.

“The issue now is the uncertainty surrounding the US fiscal cliff, and how a divided Congress will deal with the issue,” he added.

The so-called fiscal cliff, which will see the government sharply cut spending and hike taxes, is due to take effect on January 1 unless politicians find a compromise on reducing budget deficits.

However, Takumi Nomura, a senior dealer at Bank of Tokyo Mitsubishi UFJ, said the dollar may get some support from incumbent Obama, who might be able to address the issue more quickly than a newly-elected leader.