Dollar slides as US election drives oil and Treasury yields lower; sterling gains
SPY•The dollar fell to a more than one-month low after Democrats won majorities in both chambers of Congress, while oil prices and Treasury yields declined. Markets priced in an 80.7% chance of a Fed rate increase of at least 25 basis points in December.
1. Dollar and yields fall
The dollar index fell 0.22% to 101.25, its lowest level since September 30, after sliding 0.34% on Wednesday. The euro gained 0.29% to $1.1261 and the yen rose 0.27% to 157.95 per dollar, while the 10-year Treasury yield dropped 4.5 basis points to 4.847%, its lowest since September 10.
2. Rate expectations persist
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. Sterling rose 0.12% to $1.349 ahead of the Bank of England decision, while minutes from the Bank of Japan's September meeting reinforced expectations for further rate hikes, with markets widely expecting the next increase in December.
