U.S. dollar gained on Wednesday despite new tensions

The U.S. dollar gained in Europe on Wednesday, rebounding after a two-day fall. Traders considered the implications of a bad-tempered first debate between President Donald Trump and his challenger, Joe Biden.

The dollar index climbed up just above the 94 mark versus a basket of currencies. Meanwhile, the euro tumbled down by 0.3% against the dollar at $1.1706.

Despite today’s gains, the greenback is set for its worst quarter since the spring of 2017. It declined by about 3.3% as hopes for a fast recovery from the coronavirus economic crisis made investors exit safe havens and buy into riskier currencies.

However, the aftermath of the debate showed investors nervousness as uncertainty over the U.S. presidential election’s outcome remains high. During a chaotic debate, the candidates battled over the president’s leadership on the Covid-19 pandemic, the economy, and taxes. As a result, U.S. stocks futures and European stocks traded lower hours after the debate.

Meanwhile, lots of traders were cautious about linking currency moves to the debate. Thu Lan Nguyen, is the foreign exchange strategist at Commerzbank. He noted that the United States Dollar recovery might not be related to the TV debate. In fact it has, if anything, increased America’s political risks and should weigh on the United States dollar.

At the same time, European Central Bank President Christine Lagarde gained investors’ attention. She set the scene for aligning the ECB’s strategy with that of the Fed, including a plan to let inflation overshoot after it has been low for too long.

The dollar surged forward by 0.28% against the Swiss franc at 0.9218 franc, after tumbling as low as 0.9191 franc overnight.

Switzerland’s KOF leading indicator skyrocketed to a 10-year high in September, increasing for the fourth time in a row as the economy extended its recovery from the pandemic. 

How did the Chinese Yuan fare?

The yuan was steady even though twin surveys showed strong factory activity, affirming recent signs of a recovery in broad sectors of the world’s second-biggest economy. The Chinese currency traded at 6.8111 per dollar.

Against the yen, the greenback was stable at 105.64, after lowering from a two-week high of 105.74 overnight.