US Dollar: Lower yields pressure USD after Democratic sweep – Danske Bank

The US Dollar experienced a decline in value following the Democratic sweep in the US midterms, as bond yields dropped and energy prices plummeted sharply. Danske Research Team reported that both the broad USD and Norwegian Krone weakened in response to these market movements. In addition, the ADP private-sector employment report revealed an increase of 86,000 jobs in October, surpassing forecasts and indicating continued solid growth in labor demand ahead of Friday's payrolls data.

This surge in job-changer wage growth marks the highest level since March 2024, signaling tightening labor market conditions and improving workers' bargaining power, which sent a modestly hawkish signal for the Federal Reserve. Furthermore, we will hear from voting Federal Reserve members Hammack, Logan, and Barkin, who will provide insights on the October rate decision.

While AUD/USD remained steady above 0.7000 during Thursday's Asian session, bulls remained cautious as they turned their attention to Friday's crucial US NFP report. Meanwhile, USD/JPY displayed a negative bias for the second consecutive day, with hawkish Bank of Japan minutes supporting the Japanese Yen. Conversely, US midterm election results and hopes for Iran diplomacy kept the US Dollar under pressure, leading to its lowest level since late September and aiding the recovery of commodities.

Gold retreated slightly from its two-week high but maintained gains, currently trading around $4,130. The US Dollar's slide continued following the election results, reaching a fresh low since late September, which further boosted the commodity. Ripple and Stellar also began to recover as bearish pressure eased for both altcoins.