SINGAPORE/LONDON—The dollar steadied on Tuesday as traders looked ahead to U.S. midterm elections, and as excitement dimmed around China relaxing coronavirus restrictions, which had been boosting investor sentiment and weighing on the safe haven U.S. currency.
A conclusive result to the midterms could take days, but forecasts are for a Republican victory, at least in the House of Representatives, and consequently likely gridlock in Congress.
Some analysts say that outcome could be positive for bonds and negative for the dollar if it leads to less fiscal stimulus.
“If we get a gridlock outcome or Republican sweep, it won’t be so easy to get fiscal stimulus through next year, which means then that (Federal Reserve chair Jerome) Powell can afford to take the foot off the interest rate hike accelerator,” said Damien Boey, chief macro strategist at Barrenjoey in Sydney….