US Dollar Hits One-Month Low Following Democratic Sweep in Midterms
The US dollar hit a one-month low following a sweeping Democratic victory in the US midterms. Meanwhile, local markets saw the shekel remain steady at 3.157 against the dollar as investors digested robust US employment data and upcoming central bank rate decisions.
The US dollar hit a one-month low against a basket of six major currencies following a sweeping victory by the Democrats in the US midterm elections. The Democrats secured control of both the Senate and the House of Representatives, capturing Republican strongholds such as Texas for the first time in generations, as tens of millions of voters expressed sharp criticism of President Donald Trump.
In the local market, the shekel-dollar exchange rate remained virtually unchanged at 3.157 NIS, while the euro ticked up to 3.557 NIS from the previous representative rate of 3.5516 NIS. Eric Berger, FX and precious metals risk manager at Silver Gold Bull in Toronto, noted that fundamentally, concerns regarding artificial intelligence may persist given the Democratic stance on data centers and related issues. However, markets have calmed with Trump showing no inclination to contest the results, and an appetite for risk across the board generally weighs on the greenback.
The dollar slipped 0.3% against the six-currency basket to 101.13 points, while the euro advanced 0.3% to $1.12. Despite the political shift, expectations for the Federal Reserve's rate path remained largely unchanged. Markets are pricing in an 82.6% probability of at least a 25-basis-point rate hike at the December meeting, according to CME FedWatch, up from 77.4% in the previous session.
US economic data largely exceeded expectations, though market reaction remained muted. The ADP National Employment Report showed that private-sector employment in the US rose by 86,000 in October, topping the Reuters consensus forecast of 69,000. Meanwhile, a separate report from the Institute for Supply Management indicated that the services PMI slipped to 54.5 last month, slightly below the forecasted 54.8 but remaining above the 50 threshold that separates expansion from contraction, compared to 54.9 in September.
Meanwhile, the British pound edged up 0.1% to $1.3496, after hitting a more than seven-week high of $1.3503 ahead of the Bank of England's policy announcement. The central bank is widely expected to raise interest rates to 4.00% from 3.75% to counter inflation driven by surging energy costs, though it may push back against investor bets on further hikes next year. Against the Japanese yen, the dollar weakened 0.03% to 158.6 yen.
