The dollar dipped following US Midterm elections results. Greenback’s losses extended on Wednesday with an index falling half a percent against its major traded rivals.
The outcome of a split U.S. Congress raised expectations that any major U.S. fiscal policy boost to the economy is unlikely for now. Investors are cautious that the divided Congress could disrupt the rally of the world’s most liquid currency.
The greenback has been the surprise winner in the global currency markets this year on the back of President Donald Trump’s fiscal stimulus. Further, strong economic data has forced the U.S. Federal Reserve to signal higher interest rates.
But market watchers believe that the U.S. midterm election results makes any further U.S. policy boost difficult.
Against a basket of its rivals, the dollar sank 0.5 percent to 95.758, its lowest level in more than two weeks. The yield on 10-year U.S. Treasury debt was down four basis points at 3.18 percent.
Despite the prospects of more U.S. political uncertainty in the short term, equity markets rallied.
Forex – Commodities – Midterm Elections Results – Dollar dips, Gold soars
High-yielding currencies such as the Australian dollar and the New Zealand dollar were firm. Moreover, perceived safe-haven currencies such as the Japanese yen and the Swiss franc fell.
Elsewhere, the euro gained 0.6 percent to trade at $1.1491 versus the dollar. The single currency changed hands more than one percent above this year’s trough of $1.1301 reached on Aug. 15.
Sterling was the other big winner with the British currency rising half a percent. The British currency buoyed by a BBC report that Britain is preparing for a Brexit agreement by the end of November.
Gold rose on Wednesday as U.S. mid-term elections delivered a split Congress and pressured the dollar. Spot gold was up 0.4 percent at $1,230.68 per ounce, while U.S. gold futures climbed 0.5% to $1,232.10 an ounce.
Among other precious metals, silver rose 0.9 percent to $14.67 per ounce.
Platinum was up 0.6 percent at $873 an ounce after hitting $877.50, its highest in more than four months.
Sources: Reuters, CNN money, BBC
PLEASE NOTE The information above is not investment advice.