* Obama seen supportive of Federal Reserve's QE
* Congress still divided, raising risk of paralysis over
* Euro bounces back from lows ahead of Greece parliament
By Hideyuki Sano
TOKYO, Nov 7 The dollar fell broadly in Asia on
Wednesday as media projected U.S. President Barack Obama won a
closely-fought election, ensuring that the Federal Reserve's
quantitative easing will be in place.
The Democrats look set to retain a majority in the Senate
while the Republicans also appear to be solidifying their
control of the House of Representatives, keeping intact the risk
of policy paralysis over the looming "fiscal cliff" -- a sharp
fiscal tightening due to start next year.
"The Fed's quantitative easing is essentially a policy to
cheapen the dollar. Republicans have been criticising the policy
but it seems like that policy is likely to stay," said Yunosuke
Ikeda, senior forex strategist at Nomura Securities.
The dollar fell to as low as 79.81 yen, nearly a full
yen below its four-month high of 80.68 yen hit last week, before
bouncing back slightly to 80.14 yen, still down 0.3 percent on
An immediate support is seen at 79.275 yen, a low hit on
Oct. 30 right after the Bank of Japan's easing.
The dollar's drop came as the 10-year U.S. Treasuries yield
dropped seven basis points to as low as 1.68 percent
On top of Obama's support for quantitative easing, which
Romney and many Republicans are opposed as a dangerous
intervention that could stoke inflation, Obama's tougher stance
on financial regulations is viewed as positive for bonds and
negative for stocks.
"After the election, the market will likely shift its focus
to the fiscal cliff. It's not clear what Obama can achieve (to
reduce the impact of the fiscal cliff)," said Junya Tanase,
chief FX strategist at JPMorgan Chase.
About $600 billion in government spending cuts and higher
taxes will kick in early next year, unless U.S. lawmakers take
steps to mitigate their impact.
While analysts think some sort of a compromise can be
reached by the end of the year between the two parties,
investors are worried about a repeat of a major showdown last
year that led to downgrade of the U.S. credit rating.
The dollar's index against a basket of major currencies fell
0.3 percent to 80.352, slipping further from Monday's
two-month high of 80.843.
The euro rose 0.4 percent to $1.2862, bouncing back
from a two-month low of $1.2763 hit on Tuesday partly on
nervousness ahead of a parliamentary vote in Greece on the
country's austerity reforms needed to secure international aid.
Greece's coalition government hopes to overcome its own
divisions to push through the austerity package needed to avert
bankruptcy in the parliament on Wednesday.
While Prime Minister Antonis Samaras is expected to narrowly
win support for the cocktail of budget cuts, tax hikes and
labour reforms, the smallest party in his coalition will oppose
the measures, leaving him with a margin of just a handful of
The euro had earlier this week broken below its 200-day
moving average, but it has managed to cling around that level,
at $1.28267 on Wednesday, in a sign investors' fear of a major
crisis in the euro zone has subsided after the European Central
Bank introduced a scheme to buy bonds of crisis-hit countries.
"The market no longer worries about the euro zone's
break-up. The euro is under pressure but that would be a normal
currency depreciation due to poor economic performance," said
Nomura's Ikeda, adding that the euro will move in a rough
The Australian dollar also gained 0.2 percent to hit a fresh
six-week high of $1.0461, extending its gains made
after the Reserve Bank of Australia surprised some market
players by not cutting rates on Tuesday.