The US Dollar was broadly lower after the US mid-term elections which suggested that FX players expect the Trump administration to face some strong headwinds attempting to push through some of its fiscal policies given the Democratic party's control of the House of Representatives. Currency strategists say that the greenback had rallied under Trump's fiscal stimulus plan and the economic data which accompanied it, and that that may have forced the hand of the Federal Reserve which signaled its willingness to move to a higher interest rate environment. Now, all bets are off, they say.
As reported at 11:15 am (GMT) in London, the EUR/USD was trading at $1.15, a gain of 0.62% and just off the session peak of $1.152. The USD/JPY was trading lower at 113.06 Yen, down 0.31%; the pair has ranged from 112.948 Yen to 113.818 Yen. The GBP/USD was trading at $1.3163, up 0.55%, off the session high of $1.3175.
Trump Efforts Could be Hampered
What is also worrying Dollar bulls is that, with control of the House, the Democrats now have the ability to scrutinize the administration's current policies. Looking ahead, analysts say that there is greater uncertainty as to the Fed's policies relative to higher rates, and the ability for the President to move ahead with certain stimulus policies.