Dollar tumbles after Democratic midterm sweep as Treasuries rally

The dollar fell sharply after Democrats swept into Congress in the US midterm elections. Investing.com reports the dollar dropped to a one-month low as the result triggered a flight to safe havens, reversing the small gain the dollar had made while votes were still being counted.

The investingLive European session wrap describes the dollar as tumbling, with gold soaring and European stocks rebounding after an early slide in US futures. Investing.com also reports that Treasuries rallied as Democrats took Congress.

What moved and why

The political result is the main driver. According to investingLive, election post-mortems on all sides are blaming an unpopular Iran war and rising gasoline prices. The same outlet says one line of thinking in markets is that Trump may look to wrap up the war. investingLive also noted that voters rejected dozens of local ballot measures on data-center construction, a theme that adds to lingering AI worries in tech stocks.

The euro and sterling were the clearest winners. Investing.com says the pound gained as the dollar slipped. Deutsche Bank, in comments reported by Investing.com, sees lower policy risk supporting the euro, with the US debt ceiling now in focus.

Risk assets broadly firmed. Our sister site reports that Bitcoin climbed back above $80,000 after the Democratic sweep.

The fixings as a reference point

The ECB reference rates of 4 November captured the move. These are official daily fixings, not live quotes.

• EUR/USD fixed at 1.1267, up 0.79% from 1.1179 on 3 November, and 1.2% higher over five fixings.
• GBP/USD fixed at 1.3500, up 0.66% from 1.3411.
• USD/CHF fell 0.54% to 0.8155, down 1.82% over five fixings.
• AUD/USD rose 0.45% to 0.7015, recovering part of its post-RBA slip.
• USD/JPY was nearly flat at 158.25, down 0.03%.
• USD/CAD eased 0.29% to 1.3935. USD/CNY was unchanged at 6.672.

Traders can follow EUR/USD and the dollar index on TradingView.

Data in the news

US data was mixed and did little to change the picture.

1. ADP employment rose 86K in October against 65K expected, investingLive reports. The prior reading was 90K, and wage growth for all workers slowed to 4.7% from 4.8%.
2. US trade deficit narrowed to $105.0 billion in September versus $108.0 billion expected, per investingLive. Imports of capital goods, which the outlet calls a good gauge of AI spending, rose to $157.97 billion.
3. S&P Global services PMI was revised down to 56.1 from a 57.9 flash reading, according to investingLive. Business sentiment fell to its lowest since May. The investingLive writer said he fears the Fed is behind the curve on inflation.
4. ISM services came in at 54.5 against 54.8 expected and 54.9 prior. Prices paid eased to 73.0 from 74.0. investingLive said there was no dollar reaction to the report.
5. Canada's trade surplus was C$5.35 billion in September versus a C$4.1 billion estimate, per investingLive.

In energy, investingLive reports crude consolidated amid conflicting reports on US-Iran negotiations, after Al Arabiya said Washington had approved a draft memorandum of understanding. EIA data showed a crude draw of 865K barrels against an expected build of 877K.

Central banks

The ECB said its wage tracker suggests slightly higher wage growth in the first three quarters of 2027 than over the full year of 2026. There was no rate decision or major policy speech in the pack.

What to watch next

• US-Iran talks: investingLive says escalation risk is rising amid conflicting reports, and that Trump's response to the election result is the key story.
• Debt ceiling: Deutsche Bank flags it as the next policy focus for the dollar, per Investing.com.
• AI and tech sentiment: investingLive notes AI worries linger in US futures after the vote.