* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E (Adds Fed statement, quote, updates prices)
By Karen Brettell
NEW YORK, Nov 5 (Reuters) - The U.S. dollar fell to a two-week low against a basket of currencies and a seven-month low against the Japanese yen as surging stock markets reduced demand for the greenback, and as the Federal Reserve kept its loose monetary policy intact.
Stocks jumped as bets on Republicans retaining control of the Senate eased worries of major policy changes that could hurt corporate America under a Joe Biden White House, even as the presidential election hung in the balance. .N
Democrat Biden on Thursday inched nearer to victory over President Donald Trump in an exceedingly close U.S. election that hinged on razor-thin margins, while the Republican president launched a flurry of lawsuits hoping to slow down his opponent. the so called "blue wave," where Democrats also take control of the Senate in congressional elections, looked unlikely.
“The investor class loves the idea of a Democratic president and a Republican Senate that will return back to essentially a steady, normal state of affairs,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York.
The dollar index fell 0.95% against a basket of currencies =USD to 92.51.
The euro EUR= jumped 0.99% to $1.1838. The dollar dropped 0.95% against the Japanese yen JPY= to 103.49 yen, the lowest since March 12, and breached technical support at 104 yen that will now likely form resistance.
The yuan CNH= gained to a more than two-year high of 6.5994. The Chinese currency has been heavily affected by Sino-U.S. disputes since the outbreak of a bilateral trade war in 2018.
The dollar has been hurt by the Fed's zero rate policy and ongoing bond purchases as the U.S. central bank aims to stimulate growth after the economy was ravaged by business shutdowns due to COVID-19.
The U.S. central bank on Thursday pledged again to do whatever it can in coming months to sustain a U.S. economic recovery. was "virtually unchanged from the previous meeting's message," said Lou Brien, a market strategist at DRW Trading in Chicago.
Some analysts say the Fed may need to act further to boost the economy if there is no large fiscal spending, though others note that it is running out of tools.
If Treasury yields rise meaningfully the Fed is expected to shift more of its bond purchases to longer-dated debt to keep the rates low.
Currency bid prices at 3:00PM (2000 GMT) Description
U.S. Close Pct Change
+104.5500 +103.4900 Euro/Yen
+123.1600 +122.2200 Dollar/Swiss
+0.9044 Sterling/Dollar GBP=
+1.2932 Dollar/Canadian CAD=
+1.3028 Australian/Doll AUD=
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