FX.co ★ Dollar Falls to 5-Week Lows

The dollar index fell to 101.3 on Wednesday, marking its sharpest decline in about a month and its lowest level in five weeks, as traders weighed the implications of the Democrats’ sweeping victory in the midterm elections. Although a Democratic majority increases the likelihood of tighter regulatory oversight—especially in the AI sector—it is also expected to curb the potential for additional tax cuts and large-scale government spending, thereby easing concerns about a further rise in federal borrowing. At the same time, stricter AI regulation could dampen economic growth, reducing pressure on the Federal Reserve to continue raising interest rates. Futures markets now imply a 77% chance of a 25-basis-point Fed rate hike in December, down from 84% a week earlier. In currency markets, the Swiss franc and Japanese yen—both traditional safe-haven assets—were the strongest performers against the US dollar, appreciating by 0.6% and 0.4%, respectively.