Dollar edges lower as US election outcome spurs risk sentiment; sterling gains
SPY•The dollar index fell 0.25% to 101.22 after Democrats won majorities in both chambers of Congress, while sterling rose ahead of a Bank of England decision. Markets priced in an 80.7% chance of a Fed rate increase of at least 25 basis points in December.
1. Dollar declines
The dollar extended its decline on Thursday after Democrats won majorities in the Senate and House, buoying risk sentiment. The dollar index fell 0.25% to 101.22, after sliding 0.34% on Wednesday; the euro rose 0.32% to $1.1263 and the yen gained 0.35% to 157.84 per dollar.
2. Fed expectations hold
Markets priced in an 80.7% chance of a Fed rate increase of at least 25 basis points in December, up from 77.4% in the prior session. Upcoming labor-market indicators include initial jobless claims on Thursday and non-farm payrolls on Friday.
3. Sterling and yen rise
Sterling gained 0.14% to $1.349 ahead of the Bank of England's policy decision, with another rate increase expected. Minutes from the Bank of Japan's September meeting reinforced expectations for further rate hikes, with markets widely expecting the next increase in December.
