Preliminary US midterm results suggest Democrats may take both chambers
triggered the biggest one-day USD drop since Oct. 2, with the dollar index (DXY)
down about 0.4% and CHF and JPY the strongest FX performers — the franc up
nearly 1% and the yen roughly 0.7% in Asian trade; AUD labeled. Markets flagged a
Democratic win could bring tighter regulation for tech and AI, a downside risk
for US equities and the dollar. Conversely, a politically divided Washington
that curbs further tax cuts or spending could boost US Treasures. Crédit
Agricole strategist David Forest warned the dollar’s reliance on an AI-led rally
exposes it to regulatory setbacks that could weigh on the currency, but said the
decline may not persist: a breakdown in US–Iran talks and a rebound in oil could
lift inflation expectations and Fed rate-hike bets, supporting the dollar, and a
presidential veto could block tougher congressional AI rules. SMBC Nikko
strategist Rinto Maruyama said the dollar may ultimately reverse its losses.
