* Control of both Houses allows Biden to push an agenda
* More risky money seen performing better than growth opportunities
* Graphic: Global FX rates in 2020 tmsnrt.rs/2RBWI5E
LONDON, Jan. 7 (Reuters) – The dollar fell higher on Thursday, rising above its lowest levels in nearly three years Thursday after Democrats took control of the U.S. Senate, which ‘clarifies the way for a possible greater fiscal stimulus under President Joe Biden.
Money markets have been almost disrupted by chaos scenes in Washington after supporters of President Donald Trump took to the U.S. Capitol on Wednesday.
Analysts generally accept that a Democrat-controlled Senate would be very positive for global economic growth and therefore for most risky assets, but negative for bonds and the dollar because the U.S. budget and trade deficits could expand further.
“The key statement is that we should see higher inflation behind a stronger fiscal stimulus after the Democrats take control of the Senate,” said Francesco Pesole, FX strategist at ING in London.
“In the long run the dollar should be negatively affected by higher inflation.”
Thursday ‘s rise in the dollar was behind some safe – haven buying, Pesole said, reiterating ING’ s bearish outlook for the dollar in 2021.
The dollar index rose 0.2% to 89.567 in early London trading, but not far from an overnight low of 89.206, a level not seen since March 2018.
In a note to clients, BCA Research said that, with the Federal Reserve still standing, the stimulus to growth from stimulus would raise expectations of inflation, putting downward pressure on real interest rates.
They said stronger spending should cause the current U.S. account deficit to widen further.
“Scandinavian currencies, Mexican peso and North Asian EM FX stand to get the most out of these movements, even if at first, the dollar could make a short-term reversal. . ”
The Australian dollar slipped 0.3% to 77.792 U.S. cents after touching a nearly three-year high of 78.195 on Wednesday.
The euro fell 0.2% at $ 1.23030, after climbing to $ 1.2349 on Wednesday for the first time since April 2018.
The dollar gained 0.3% to 103.385 yen, after plunging to 102.595 on Wednesday for the first time since March.
But after a fall of nearly 7% in 2020 for the dollar index and a fall of as much as 0.9% in the new year, the U.S. currency may find some relief from some trade settlement crowded.
“People have been bearish on the dollar now for at least six or nine months,” said Minh Trang, a senior FX trader at Silicon Valley Bank in Santa Clara, California.
“Of course, you have to take a few breaths now and then.”
The Yuan was broadly flat at 6.4596 per dollar after Chinese authorities expressed a desire for a slower pace of gain.
The comments from the Foreign Exchange Administration (SAFE) on Wednesday remain about 10% on the greenback from May last year as China’s economic reversal has revived the world’s pandemic to lead.
The British pound traded flat at $ 1.3615 while falling below the nearly three-year high of $ 1.3703 that was rubbed on Monday.
Bitcoin marked a new high of $ 37,800 on Thursday, extending an increase of more than 800% from mid-March.
It eventually traded at $ 37,332. (Reporting by Ritvik Carvalho; additional commentary by Kevin Buckland and Stanley White in TOKYO, edited by Emelia Sithole-Matarise)