Asian stocks rose to a one-month peak on Thursday as investors, relieved to have moved past the U.S. midterm elections without any major political surprises, drove a Wall Street rally, while the dollar bounced and pulled away from 2-1/2-week lows. The election results were as the market expected; a split Congress with Democrats winning control of the House of Representatives and Republicans cementing their majority in the Senate. Traders initially reacted to this result by selling the dollar on Wednesday as the likelihood of further fiscal stimulus faded. However, the dollar recouped most of its losses versus the euro and yen by the U.S. close as focus shifted away from politics to the Fed’s monetary policy. The central bank’s Federal Open Market Committee (FOMC) is due to release its latest policy decision on Thursday after of a two-day meeting. The Fed has raised rates three times this year as the U.S. economy boomed and inflation started to pick up. It has signalled a rate rise in December, with two more hikes by mid-2019.
In the currency market the dollar recouped most of its losses versus the euro and yen by the U.S. close as focus shifted away from politics to the Fed’s monetary policy. The central bank’s Federal Open Market Committee (FOMC) is due to release its latest policy decision on Thursday after of a two-day meeting, EURUSD was up 0.05 percent at 1.1432, after pulling back sharply from a high of 1.1500 brushed earlier on Wednesday. USDJPY was a shade higher at 113.59 and in striking distance of a one-month peak of 113.82 reached the previous day. GBPUSD traded flat at 1.3124 in early Asian trade after gaining 3.36 percent versus the dollar in the last six trading sessions, as traders bet a Brexit agreement was close.
In energy markets Oil prices struggled after surging U.S. crude output hit another record and domestic inventories rose more than expected. U.S. crude futures inched up 0.05 percent to $61.70 a barrel after falling to an eight-month trough of $61.20 on Wednesday. Brent crude dipped 0.08 percent to 72.01 a barrel following a loss of 1.4 percent the previous day.