Crédit Agricole: Midterm Outcome Adds to USD Downside Risks - FJElite

The midterm result has increased concerns that tighter regulation could slow AI investment, forcing investors to reassess US tech and the dollar. A weaker AI boom would be negative for the US growth story, while heavy reliance on foreign buying of US technology stocks to finance the current-account deficit may also reduce the dollar’s safe-haven appeal when risk aversion is driven by AI-related market stress.

Historically, the dollar has fallen by around 3% in the months after midterms that produced Democratic control of Congress under a Republican president. Legislative gridlock and the risk of future government shutdowns could add further pressure, with the next funding deadline on 11 December. Gold and the CHF are seen as the clearest hedges against a politically driven USD selloff, while unresolved Middle East tensions remain another near-term risk. Attention next week turns to US CPI and PPI, UK GDP and central-bank commentary.