Key facts
- The dollar index, which tracks the greenback against six currencies, edged down 0.2% to 101.7.
- The yen strengthened to 158.30 per US dollar and sterling edged higher to $1.3440.
- Carol Kong of Commonwealth Bank of Australia said a Democratic sweep would limit government spending over Trump's term.
- Kong said she was watching whether the election outcome leads to a restart of a US bombing campaign in Iran.
- China's offshore yuan last traded at 6.6673 per dollar after its biggest one-day drop since May 15.
- Oil prices were little changed at $103.85 a barrel after easing about 1% on Tuesday.
The dollar fell against most major currencies on November 4 as the first results of the US midterm elections began to arrive, with investors positioning for a potentially strong Democratic showing. The dollar index, which measures the greenback against a basket of six currencies, edged down 0.2% to 101.7, according to Reuters.
Democratic Senator Jon Ossoff won reelection in Georgia, the first major race to be called. Whether Democrats can take control of Congress from Donald Trump's Republicans was likely still hours away from a definitive answer, Reuters reported. As of 7:30 p.m. ET (0030 GMT), US media outlets had projected winners in a handful of House races after polls closed in 10 states, with voting still under way across much of the country.
The euro firmed 0.2% to $1.1212 and the yen strengthened to 158.30 per US dollar in early trading. Sterling edged higher to $1.3440, with traders watching the Bank of England's policy announcement on Thursday. The yield on the benchmark 10-year US Treasury note fell 4 basis points to 4.919%.
"Given the Democrats are favoured right now, our expectation is that they will take control of both the House and the Senate," said Carol Kong, currency strategist at Commonwealth Bank of Australia. "If that pans out, the US dollar could sell off further from here, because a Democratic sweep would limit government spending over Trump's term."
Kong said investors were also watching the risk of an escalation in the Middle East depending on the election outcome. "If the Republicans do lose control of the House and the Senate, what will the President do? He previously flagged that he will restart a bombing campaign in Iran after the election, so we are watching that very closely," she said. "If he does ramp up the aggression in the conflict, then we could see oil prices jump sharply higher, and that will support the US dollar."
Oil prices were little changed at $103.85 a barrel after easing about 1% on Tuesday to the lowest in nearly four weeks, as the market weighed talks to end the wars in Iran and Ukraine against worries that recent attacks in both conflicts could further disrupt supplies.
China's offshore yuan last traded at 6.6673 per dollar, stabilizing after its biggest one-day drop since May 15 on Tuesday, when the People's Bank of China raised the amount of foreign currency that financial institutions must hold in reserve in a move to slow the yuan's rally.