SHANGHAI/SINGAPORE: The US dollar index fell 0.6% to a one-month low of 101.27 on Wednesday as Democratic gains in Congress fuelled concerns over tighter artificial intelligence regulation.
The euro climbed 0.6% to $1.1258, while the yen strengthened nearly 0.8% to 157.92 per dollar. The greenback also weakened 0.6% against the Swiss franc to 0.8159.
US Treasury yields declined as investors turned to government bonds. The benchmark 10-year yield dropped nearly five basis points to 4.915%. Investors also reduced expectations for further US interest rate increases next year.
Democrats secured major congressional gains in Tuesday’s midterm elections, with projections indicating they would control both the House of Representatives and Senate.
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Currency strategist Moh Siong Sim of OCBC said investors feared stricter oversight of artificial intelligence (AI) could slow US economic growth.
He linked those concerns to weaker Nasdaq performance but cautioned that President Donald Trump’s veto power could obstruct new federal legislation.
Carol Kong, currency strategist at Commonwealth Bank of Australia, expected strong US economic data to support further interest rate increases and the dollar.
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Kong also warned that renewed military operations in the Middle East could push oil prices higher and strengthen the US currency.
Oil eased to $102.9 a barrel after falling about 1% on Tuesday, when prices reached their lowest level in nearly four weeks. Sterling gained 0.3% to $1.3458 as traders awaited Thursday’s Bank of England policy decision.
China’s offshore yuan slipped 0.2% to 6.6836 per dollar after Beijing increased foreign currency reserve requirements for financial institutions.
With input from Reuters
