Dollar edges lower as US election outcome cheers global markets

The US dollar weakened as Democrats’ decisive midterm victory eased fears of disputed results and uncertainty over US policy, helping global shares and bonds rally. The result also raised the prospect of political gridlock in Washington, while lower Treasury yields put further pressure on the dollar.

The dollar index fell 0.06 per cent to 101.41 after dropping 0.36 per cent in the previous session; the euro rose to $1.1241 and the yen strengthened to 158.25 per dollar. Markets still largely expected a Federal Reserve rate rise in December, while sterling reached a more than seven-week high ahead of an expected Bank of England increase; Bank of Japan minutes also reinforced expectations of further rate rises.