Foreign exchange markets moved today towards pricing a victory for US Democratic candidate Joe Biden against President Donald Trump despite warnings that possible post-election disputes could unleash weeks of dollar volatility. 

The dollar was down 0.44% against a basket of currencies after hitting a month high yesterday. 

Analysts believe a Biden win would weaken the dollar as the former vice president is expected to spend big on stimulus and to take a freer approach to trade, boosting other currencies at the dollar's expense. 

They cautioned, however, that uncertainty was very high about the election outcome and that taking positions might prove premature. 

The euro extended gains and rose 0.58% against the dollar, crossing the $1.17 bar, while sterling also rose slightly to just below $1.30. 

Meanwhile, European stock markets were making strong gains while euro zone government yields rose and oil prices extended their rally, exposing how investors were gradually switching from a cautious mood and getting ready to bet on a clear victory for the Democratic candidate.

Donald Trump, who is trailing Biden in national opinion polls, has criticised mail-in ballots and suggested he would deploy lawyers if states are still counting votes after election day today. 

Investors had taken a more cautious approach as the election neared.

Rather than outright bets on a particular outcome, many traders had flocked to the safety of dollars so that they were well positioned to take advantage of volatility when results arrive. 

It is not unusual in the US for states to take several days or even weeks to count their votes, and a record surge in mail ballots due to the Covid-19 pandemic could draw out the process further this year. 

"Under no scenario will Donald Trump be declared a victor on election night," Biden campaign manager Jennifer O'Malley Dillon told reporters.