* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E (Adds quote, updates prices)
By Karen Brettell
NEW YORK, Nov 4 (Reuters) - The U.S. dollar gained against a basket of currencies on Wednesday after Democrats looked unlikely to take control of the U.S. Senate as a result of Tuesday's U.S. presidential election, leading investors to unwind bets that a large fiscal package is likely.
President Donald Trump and Democratic challenger Joe Biden on Wednesday each faced narrow paths to potential victory in a close-fought presidential election that will be determined by a razor-thin margin. so-called “blue wave” of votes for Democrats did not emerge as many had expected, making it likely that Republicans will maintain control of the U.S. Senate, and oppose any massive increase in stimulus spending.
“What's tough is you can't even say for sure what the results are going to be, but a split Congress is likely,” said Edward Moya, senior market analyst at OANDA in New York.
“You're probably going to see that the dollar decline will still take place, it just won't be as accelerated as with what would have happened with a blue wave,” Moya said.
The dollar index =USD rose 0.31% to 93.42, after reaching a one-month high of 94.31 in overnight trading.
The euro EUR= gained 0.08% to $1.1720, after earlier dropping to $1.1602, its lowest since July 24.
The greenback was unchanged against the Japanese yen at 104.46 yen.
Despite uncertainty over the U.S. election result, risk appetite remained solid with stocks rising, which likely limited the strength of Wednesday's dollar rally.
"We have not so far seen big risk-off moves so I would think that probably that's the template for how things will evolve here," said Jonathan Davies, head of currency strategy at UBS.
"So even if we're getting more indications that it's going to be drawn out, the experience so far is not suggesting that we're going to see huge FX volatility and huge dollar strength," he added.
Overnight volatility gauges for euro-dollar and dollar-yen fell, after hitting their highest levels since March earlier this week EURONO= , JPYONO= .
The prospect of legal challenges over the election result may still dampen risk taking in the coming days or weeks, which would likely lift the greenback.
"The contested election outcome and this going to the courts, that is what I think everyone does not want," said Moya. "If you don't have that certainty then you're going to eventually see that risk aversion will persist like we saw in 2000.”
Currency bid prices at 12:05PM (1705 GMT) Description
U.S. Close Pct Change
+105.3400 +104.1600 Euro/Yen
+123.0700 +121.9800 Dollar/Swiss
+0.9093 Sterling/Dollar GBP=
+1.2916 Dollar/Canadian CAD=
+1.3095 Australian/Doll AUD=
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