• The US dollar index is gaining as early exit polls augment volatility in financial markets.
• Exit polls from Georgia show Trump with a 10% lead over Harris, estimated by less than 1% of the vote.
• Exit polls in Pennsylvania show Harris ahead, with about 8% of expected votes.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major indices, gained close to 104.20 during Wednesday’s Asian session. The US dollar is gaining in value due to market caution ahead of the US presidential election results. Polls are now closed in more than two dozen states and early exit polls are starting to trickle in, increasing volatility in financial markets.

Early exit polls in Georgia, one of the first states for which data is available, show a tilt toward Republican presidential candidate Donald Trump. Preliminary results suggest that Trump has a roughly 10% lead over Democratic nominee Kamala Harris with 16 electoral votes, although that estimate is based on less than 1% of votes counted, according to The Washington Post.

According to CBC News, preliminary exit poll results in Pennsylvania show Harris ahead. With about 8% of the expected votes counted, Kamala obtained a majority of 71%. At stake for the state are 19 electoral votes.

Follow our live coverage: Trump or Harris? Who will become the 47th US president and how will the markets react?

Improving U.S. Treasury yields are strengthening the U.S. dollar, and yields on 2-year and 10-year U.S. Treasury bonds at the time of this report were 4.23% and 4.34%, respectively. Traders remain cautious due to the close race in the US presidential elections. The market is closely watching Congress’ scrutiny because a shift in either party could lead to significant changes in spending and tax policy.

On the monetary policy front, investors are focused on the Federal Reserve’s interest rate decision scheduled for Thursday, with the broad consensus predicting a 25 basis point cut. According to the CME FedWatch Tool, the probability that the Fed will cut interest rates at the November meeting is 96.4%, signaling sturdy market expectations for a moderate cut.

On the economic front, the U.S. ISM Services Purchasing Managers’ Index rose to 56.0 in October, up from 54.9 in September, beating the forecast of 53.8. However, the S&P Global Services PMI recorded a level of 55.0 in October, slightly below both the previous reading and the expected level of 55.3.