The dollar sunk to its lowest level in three years, on Wednesday. This news comes amid markets foreseeing a Democratic win in the US Senate election in Georgia, which could potentially lead to a more extensive fiscal stimulus package.
Saxo Bank’s head of FX strategy, John Hardy, in response to the situation said, ““The reaction pattern is along the lines of what we were originally expecting if we had seen a Blue wave scenario in the original November (U.S. presidential) election.”
“It’s still a pretty tough environment to do stimulus and to do legislation but it’s much more possible than if there was no majority there for the Democrats,” he added.
Democrats won one U.S. Senate race in Georgia and led in another on Wednesday, revealed Reuters. Analysts have predicted that a Senate controlled by Democrats would likely be positive for global economic growth but the opposite is to be expected for the dollar and bonds as the US budget and trade deficits grow further.