Easing Market Uncertainty

The global currency markets reacted swiftly to the massive political shift in Washington today. The US dollar saw a slight but highly significant decline following the Democrats' landslide victory in the US midterm elections. The Democrats successfully secured a massive majority in both the Senate and the House of Representatives. This decisive victory instantly removed a major source of global market uncertainty, as investors no longer fear contested election results. Consequently, US Treasury bonds and global stocks rallied hard.

Yen and Pound Surge

The dollar index fell 0.06 percent to 101.41, continuing its downward trend from the previous session. Meanwhile, the Japanese yen rose 0.08 percent to 158.25 against the dollar. This surge followed the release of the Bank of Japan’s September meeting minutes, which strongly reinforced expectations of another massive interest rate hike. The British pound also climbed 0.38 percent to $1.3462, hovering near a seven-week high ahead of a highly anticipated Bank of England monetary policy announcement.

Crypto and Fed Expectations

Despite the sudden political changes in the United States, global expectations regarding the Federal Reserve remain incredibly rigid. Markets currently expect the Fed to raise interest rates by at least 25 basis points at their scheduled December meeting. The cryptocurrency market also reacted positively to the easing political tension, with Bitcoin rising 0.60 percent to hit $80,660.59.

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