FOREX-Dollar drops as less stimulus dents expectations of higher bond yields

    * Graphic: World FX rates in 2020

 (Adds details, updates prices; previous LONDON)
    By Karen Brettell
    NEW YORK, Nov 5 (Reuters) - The U.S. dollar fell to two-week
low against a basket of currencies and a seven-month low against
the Japanese yen, as investors adjusted for the prospect that
Republicans will maintain control of the U.S. senate, and stifle
any plans for a large new stimulus package.
    Democrat Joe Biden edged closer to victory in the U.S.
presidential race as election officials tallied votes in the
handful of states that will determine the outcome and protesters
took to the streets.
    But the so called ‘blue wave’ where Democrats would also
take control of the Senate in Congressional elections looked
    “I think the market’s assuming that Biden wins the White
House but that the Senate is not going to be in the Democrats'
hands, so you don’t have as big of a stimulus,” said Marc
Chandler, chief market strategist at Bannockburn Global Forex in
New York.
    U.S. Treasury yields dropped from four-month highs as a
large jump in near-term supply to fund stimulus became less
likely, reducing the appeal of the debt and weighing on the
    “Typically a country with a large budget deficit, a large
current account deficit, has to offer a large interest rate
premium to suck in world savings, and because we can’t, because
of the weak economy, the low inflation, I think that we can’t
offer a sufficiently high interest rate premium,” said Chandler.
“This is a broad dollar move.”
    Stronger risk appetite as stock investors bet that
Republicans would stifle any Democrat plans to raise taxes or
tighten corporate regulations also helped to reduce demand for
the greenback.
    The dollar index fell 0.81% against a basket of currencies
 to 92.66.
    The euro jumped 0.90% to $1.1828. The dollar dropped
0.68% against the Japanese yen to 103.77 yen, the lowest
since March 12, and breached technical support at 104 yen that
will now likely form resistance.
    The yuan 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 the bilateral trade war
in 2018.
    The Federal Reserve will complete its two-day meeting on
Thursday, but is not expected to announce any major changes in
monetary policy.
    "The Fed today is a bit of a sideshow but there is a chance
it may strengthen forward guidance around potential quantitative
easing and that would be dollar negative as you may also have
less stimulus," said Justin Onuekwusi, portfolio manager at
    The dollar was also weak against the British pound and
Norwegian crown even after the Bank of England ramped up its
bond purchase plan and Norway's central bank said it would
maintain its accommodating policy.
    U.S. jobs data for October released on Friday is the next
major economic focus.
    Currency bid prices at 9:37AM (1437 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1828        $1.1722     +0.90%         +5.51%      +1.1859     +1.1712
 Dollar/Yen       JPY=        103.7700       104.4800    -0.68%         -4.68%      +104.5500   +103.6200
 Euro/Yen         EURJPY=     122.76         122.53      +0.19%         +0.66%      +123.1600   +122.2200
 Dollar/Swiss     CHF=        0.9060         0.9124      -0.70%         -6.39%      +0.9135     +0.9045
 Sterling/Dollar  GBP=        1.3089         1.2985      +0.80%         -1.28%      +1.3109     +1.2932
 Dollar/Canadian  CAD=        1.3065         1.3139      -0.56%         +0.58%      +1.3177     +1.3052
 Australian/Doll  AUD=        0.7241         0.7173      +0.95%         +3.13%      +0.7254     +0.7146
 Euro/Swiss       EURCHF=     1.0717         1.0690      +0.25%         -1.24%      +1.0726     +1.0687
 Euro/Sterling    EURGBP=     0.9037         0.9025      +0.13%         +6.88%      +0.9071     +0.9007
 NZ               NZD=        0.6752         0.6694      +0.87%         +0.22%      +0.6763     +0.6680
 Dollar/Norway    NOK=        9.1907         9.3174      -1.36%         +4.70%      +9.3675     +9.1472
 Euro/Norway      EURNOK=     10.8730        10.9269     -0.49%         +10.52%     +10.9740    +10.8460
 Dollar/Sweden    SEK=        8.6865         8.7772      -0.16%         -7.07%      +8.8034     +8.6657
 Euro/Sweden      EURSEK=     10.2763        10.2928     -0.16%         -1.84%      +10.3180    +10.2725

 (Additional reporting by Saikat Chatterjee in London; Editing
by Kirsten Donovan)