US Dollar is still at risk from the Democrats losing at least one house of Congress – DBS Bank

Markets pulled back bets for a Red Wave at the US mid-term elections to bolster equities and weaken the greenback. As economists at DBS Bank note, the US Dollar is still at risk from the Democrats losing at least one house of Congress.

Risk remains for GOP to wrest control of one house of Congress

“The Republicans did not make the significant gains suggested by the polls. Control of the US Senate hangs in the balance with the Georgia Senate race headed for a runoff on 6 December. The contest to control the House remains too close. However, sentiment could reverse again if the Republicans capture a thin majority.”

“The greenback is still at risk from the Democrats losing at least one house of Congress. The GOP has threatened to revive brinksmanship with the White House, demanding spending cuts in exchange for lifting the debt ceiling next year.”

“Spending cuts should help ease inflation worries, and together with a US debt default risk, will question the sustainability of the USD’s strength achieved this year.”