NZD/USD bulls gather over prospects of a Biden US election victory

• NZD/USD has been trading according to the US dollar and US election results.
• The risk of a contested election is bullish for the dollar, but kiwi bulls await the proper result. 

NZD/USD is currently trading at 0.6696 between the day’s range of 0.6613 and 0.6743, up some 0.37% on the day so far.

The US election is too close to call and there is the likelihood of a contested election result which should be risk negative and a weight on the higher beta currencies such as the antipodeans. 

There are still potentially days until votes in all key states are counted and the Trump Campaign is taking critical legal actions in Pennsylvania. 

In fact, so far Trump is legally disputing Pennsylvania, Michigan and Wisconsin.

The Republicans appear to have taken Congress while betting odds have Biden slightly ahead to win.

”Markets took developments positively, despite the narrow race and possibility of contention – potentially trading on the expectation of a financially-restrained Biden Presidency,” analysts at ANZ bank noted.

Meanwhile, the analysts argue that it’s difficult to be definitive here – ”uncertainty hasn’t died down and bonds and equity markets are both rallying simultaneously, one liking the “result” and one not”.

”Odd price action like that speaks to more volatility than anything else, but it does seem that there are plenty eager to deploy risk once we get a proper result, and all else equal, that would bias Kiwi higher,” they argued.

DXY to rally?

However, a contested election is perhaps positive for risk-off forex for the time being and that should support the US dollar, especially considering the prolonged prospects of any financial aid agreement during the lame-duck session. 

The greenback has been pushed and pulled throughout the elections as follows:

There could be a rally on the horizon if it is confirmed that there will be a contested election result. 

NZD/USD levels