US dollar index hits 1-month low at 101.41 after midterms

US dollar index hits 1-month low at 101.41 after midterms A blue wave moved currency markets before Washington finished counting. The US dollar index slid to a one-month low of 101.41 on Wednesday after Democrats captured both the Senate and the House. According to Reuters, traders aren't only reacting to who won. They're pricing in a slower economy. Much of recent US growth has been tied to AI spending, and a Democrat-led Congress raises the odds of tougher rules on the sector and pushback on data centres. Slower growth also reduces the need for interest rate hikes, which usually support a currency. The euro was up 0.4% at $1.1236, while the sterling climbed 0.46% to $1.3475. The safe haven currencies fared even better. The dollar dropped 0.54% versus the Swiss franc and 0.38% versus the yen to trade at 158.09. Gold spiked 2.2% to above $4,000 an ounce. The yield on 10-year Treasuries edged down to 4.92% amid purchases of US government bonds. Stocks related to AI fell sharply in Asian trade. XTB's Kathleen Brooks stated that SpaceX fell 5% in pre-market trading, while Tesla rose by more than 4% since Elon Musk is regarded as an anathema for most Democrats. Musk has spent $446 million in midterms via Republican groups. Brooks stated that increased scrutiny of AI may also cast a shadow on a possible merger of his two firms. US futures initially pointed to sharp declines before rising following a conciliatory tone from Trump and gains in European markets. Some analysts doubt it. OCBC's Moh Siong Sim noted that passing federal legislation is hard while Trump holds a veto. JP Morgan Asset Management's Tai Hui pointed to tariffs, foreign policy and existing regulations as levers Trump still controls. Convera's George Vessey called the result a constraint on policy, not a challenge to US growth.