The dollar stumbled against major currencies and stock markets were mixed in Asia Wednesday as US elections handed President Barack Obama a second term but no change to the nation's political gridlock.
Financial markets took a generally gloomy view of the outcome of the vote, which promises more partisan politics in the US Congress, with Republicans projected to retain the House while Democrats hold the Senate.
The euro bought $1.2850 in Tokyo, up from $1.2788 early Wednesday and $1.2814 in New York late Tuesday. The greenback was also weaker against the yen, at 80.20 yen compared with 80.34 yen in New York.
The dollar was broadly lower against other Asia-Pacific currencies. The Australian dollar rose to $1.0467 from $1.0432 while the greenback sank to 1,084.21 Korean won from 1,091.20 won.
"Markets have reacted with the US dollar losing a little bit of ground that it's gained over the last few days as an initial knee-jerk reaction," said Jason Hughes, head of premium client management for IG Markets Singapore.
"We still have the stalemate that was there with the conservatives in the House not going to be allowing progress around the Obama plans," he added.
Asian stock markets saw cautious trade early Wednesday as investors awaited the outcome of the vote after a nail-biting campaign, and as Obama's supporters erupted in celebration the reaction remained muted.
Tokyo was flat, nudging down 2.26 points to 8,972.89, while Sydney gained 0.71 percent, or 31.7 points, to end at 4,516.5 and Seoul closed up 0.49 percent, or 9.38 points, at 1,937.55.
Hong Kong shares ended 0.71 percent, or 155.42 points, up at 22,099.85 and Shanghai was flat, edging down 0.27 points to 2,105.73.
Observers of the deficit-ridden US economy are focused on the prospects for a break in a stalemate that has paralysed the "do-nothing Congress" as the nation barrels towards a dangerous financial reckoning.
With a combination of expiring tax breaks and federal spending cuts looming, there are fears the US economy could plunge over a so-called "fiscal cliff" in January unless politicians find a compromise on reducing budget deficits.
Shane Oliver, head of investment strategy and chief economist at AMP Capital, said that despite the thumping victory for the Democrat incumbent the vote was no political game-changer.
"In reality it's more of the same with attention now turning to solving the fiscal cliff, and on this front negotiations are likely to be difficult and protracted and the Republican controlled House may dig its heels in," he said.
An Obama victory was also seen among traders as a dollar-selling cue as it may herald further easing measures by the US Federal Reserve, after the central bank ushered in a vast bond-buying programme to spur the world's biggest economy.
Chief currency strategist with Australia's Westpac, Robert Rennie, said the markets' sense was that another term for Obama means "four more years of QE" -- the Fed's pump-priming "quantitative easing" now in its third round.
"So in Asian trading the initial reaction is to sell the dollar and buy gold," he told AFP.
The fiscal cliff that will dominate discussions in Congress between now and Christmas is a major threat to the economy after a protracted but possibly reckless compromise was agreed last year between Democrats and Republicans.
If Congress fails to agree on how to cut spending over the medium term, the current deal would force deep, immediate spending cuts that could tip the United States back into recession in a major blow for the slowing global economy.