US dollar slides after Democrats’ midterm election win as growth fears rise

US dollar slides after Democrats’ midterm election win as growth fears rise Concern over greater AI regulation, while investors move into US treasuries as Trump faces political gridlock

The US dollar has fallen sharply after the Democrats won control of the Senate and the House in the midterm elections, sparking fears that greater regulation of AI could slow economic growth.

The dollar hit a one-month low on Wednesday while coming under pressure from falling bond yields, as investors moved into US treasuries, viewed as a safe haven from the political gridlock anticipated during the rest of Donald Trump’s final term in office.

The dollar index, which measures it against a basket of six currencies, slid to its lowest level in a month and the pound and the euro gained against the dollar. The US currency also slid against the yen and the Swiss franc, currencies that traders tend to turn to during times of uncertainty.

Meanwhile, the 10-year Treasury yield fell by almost five basis points to 4.915%.

American voters rejected Trump and the Republican party’s agenda across the country, as the Democrats’ “blue wave” led to the party securing Senate seats in traditional Republican strongholds such as Texas, Iowa, North Carolina and South Carolina.

Axel Rudolph, the chief technical analyst at the trading platform IG, said: “The scale of the losses will inevitably raise questions about Trump’s ability to push through his agenda over the next two years, and markets are already reacting. The dollar is under pressure as investors reassess the political outlook, while gold and silver are benefiting as safe haven plays.”

Futures trading initially indicated US stock markets would open sharply lower, with the tech-heavy Nasdaq expected to slide on fears over the prospects for AI companies. However, indicators later suggested Wall Street could open higher as Trump’s conciliatory tone and rises on European markets cheered investors.