Traders in Tokyo woke up to a political earthquake in Washington and a softer dollar. The US election dollar impact showed up quickly on Thursday: the dollar index fell 0.25% to 101.22, extending a 0.34% slide the day before. Democrats swept to majorities in both the Senate and the House, and markets cheered.
What Markets Did
The euro rose 0.32% to $1.1263, and the yen strengthened to 157.84 per dollar. Sterling climbed towards a seven-week high ahead of a Bank of England decision. Global equities and US Treasuries gained, and oil prices dropped sharply.
Analysts linked the oil move to expectations that President Donald Trump will struggle to push an aggressive agenda, including the US-Israeli war on Iran and trade tariffs. One strategist cautioned that some of the move could be overreaction and positioning rather than a lasting trend.
The Fed Hasn’t Blinked
Despite the political shift, expectations for US interest rates barely moved. Markets see about an 80.7% chance of a Fed rate rise of at least 25 basis points in December. Friday’s jobs report will be the next big test.
Why This Matters in Lagos, Nairobi and Johannesburg
A weaker dollar can be welcome news for African economies. Many governments and companies owe money in dollars, so a softer greenback can make repayments less painful. Cheaper oil helps importers such as Kenya by easing fuel and transport costs. For exporters like Nigeria, it cuts the other way and puts pressure on revenue.
That link is timely. Nigeria’s president is asking the Senate for fresh foreign borrowing, and any shift in the dollar, yields or oil prices affects the cost of that deal.
Don’t Celebrate Too Early
A one-day dip is not a trend. With rate hikes still likely in the US, the dollar could bounce back. Governments, traders and small businesses that import goods should plan for both outcomes. The election has removed one big uncertainty, but the next surprise is probably only a data release away.
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