Democrats sweep Congress; gold jumps 3.63% back above $4,000

Democrats won control of both houses of the US Congress in the midterms, FXStreet reported, and the dollar closed lower against all seven majors on our feed. Gold rose 3.63% to $4,063.84, its first close above $4,000 since 29 October, and WTI fell 9%, FXStreet said.

The midterms hit the dollar

• Democrats won majorities in both the Senate and the House of Representatives, taking control from the Republicans, FXStreet reported. In a note at 13:58 UTC, Action Forex said the dollar index had fallen 0.6% toward 101.27, a one-month low, as the US 10-year yield dropped about 5 basis points toward 4.917% and the 2-year about 3, to 4.602%.

• On our feed the dollar closed lower against all seven majors, from 0.17% against the yen to 0.63% against the New Zealand dollar, after winning back part of the drop; FXStreet said resilient US data helped it regain some ground. ING's Chris Turner said much of the move was being reversed as investors refocused on a strong US economy and a tightening Fed, and Société Générale's Kit Juckes said US strategists saw limited fiscal impact from a Democrat-controlled Congress.

• WTI fell 9%, FXStreet said, adding that the immediate trigger was unclear and that the move could be linked to the Democratic victory, which could put pressure on President Trump to end the war with Iran. House Democratic leader Hakeem Jeffries said Democrats would pursue legislation to stop the president's tariffs and end that war, investingLive reported.

Gold and the currencies at the close

• Gold rose 3.63% from Tuesday's close of $3,921.34 to $4,063.84 on our feed, its first close above $4,000 since 29 October, after a low of $3,919.84 at 00:37 UTC on Wednesday and a high of $4,070.43 at 18:07 UTC; on Friday it had closed at $3,875.18. FXStreet said the Democratic win rattled the dollar, and Action Forex said uncertainty over political action and fiscal concerns prompted dollar selling. After the close, FXStreet called its rise of more than 3.60% the biggest since mid-August.

• EUR/USD rose 0.32% to 1.12287. It reached 1.12731 at 13:12 UTC and traded above 1.1269, the upper line of the tell in our weekly wrap, in the 12:00 and 13:00 UTC hours, but closed below it, so the tell has not fired.

• GBP/USD rose 0.43% to 1.34716, its sixth higher close in a row and the highest of its last eleven, after touching 1.35033 at 13:13 UTC. FXStreet called that peak a seven-week high and said the Bank of England was forecast to raise its rate to 4.00% from 3.75%, with three more hikes priced after that.

• AUD/USD rose 0.57% to 0.70052, back above 0.70 after two closes below it; FXStreet said the midterm outcome helped it recover from the two-week lows that followed the Reserve Bank of Australia's dovish hike. NZD/USD rose 0.63% to 0.56208, the dollar's biggest move, despite New Zealand's highest jobless rate in 11 years, FXStreet said.

• USD/JPY fell 0.17% to 158.427, the dollar's smallest loss and its seventh close in a row above 157.50; it traded below that level only in the 04:00 UTC hour, down to 157.397. FXStreet said the yen underperformed its peers despite the dollar's sell-off, and Japanese government spokesman Minoru Kihara said the government was watching market moves with a high sense of urgency.

• USD/CHF fell 0.46% to 0.81708, the lowest of its last eleven closes, and was back below 0.8190, the support Action Forex had flagged, a session after closing above it; USD/CAD fell 0.23% to 1.39775, back below 1.40.

What the data showed

• EUR · Flash inflation: 4.0% on the year in October, as forecast, up from 3.8%; investingLive said it was the first reading at 4% since September 2023. Core inflation: 2.5%, as forecast.

• USD · ISM services PMI: 54.5, against a 54.8 forecast, down from 54.9. ADP private payrolls rose by 86,000 in October, against 69,000 expected, FXStreet said.

Market gauges and what's next

Our proprietary metrics at the close of the session:

• Readings: an MRS of 71, from 42. Its news component was back at its full 20, from zero at the previous close, when New Zealand's jobs data was due 15 minutes before it, so 20 of the 29 points were the calendar. The CTS read 50, unchanged, with its carry backdrop still at 64 out of 100; the FSI read 50, Neutral, from 55.

• Top of our strength table: the yen, a clear leader for a second session, first for 21% of the session's 1,440 minutes, with the dollar second on 258. Yet the yen gained the least against the dollar of the seven majors. The table counts minutes in each place, not the session's net move.

• Bottom: no currency clearly trailed.

Next: the Bank of England decides today at 12:00 UTC, with a hike to 4.00% from 3.75% forecast, and Governor Bailey speaks at 12:30. On Friday the calendar has October's US nonfarm payrolls, which FXStreet said markets were looking ahead to, and Canada's jobs report.