US dollar drifts on Middle East, midterm risks; Aussie and yuan dip
Swiss franc fails to hold gains after inflation data
The US dollar remained relatively stable on Tuesday (Nov 3) amid concerns surrounding US-Iran tensions and the upcoming US midterm elections. Meanwhile, the Australian dollar and China's yuan faced downward pressure due to policy shifts. The euro saw slight losses, trading at US$1.1178, while the pound held steady at US$1.3410, and the yen weakened to 157.82.
Kit Juckes, head of FX strategy at Societe Generale, highlighted the risks associated with domestic policymaking becoming more challenging if the US government fails to agree on a budget amid a significant deficit and spending. Meanwhile, diplomatic efforts to avoid renewed conflict in the Middle East following the US elections contributed to lower oil prices, impacting the dollar.
Iran and the US were reportedly far from reaching a deal to end the war. In China, the yuan experienced a sharp decline after the central bank raised the foreign currency reserves requirement, seen as an attempt to curb its recent gains. The greenback increased by 0.4 percent against the yuan, reaching its largest daily jump since March.
The Australian dollar dropped up to 0.5 percent and closed at US$0.6981 after the Reserve Bank of Australia raised its cash rate by 25 basis points to 4.85 percent, as expected. The split vote raised doubts about potential future increases. The RBA governor hinted at a potential end to the tightening cycle, signaling a more measured approach.
Other central banks, including Britain, Norway, and Sweden, are set to announce policy decisions this week. The Swiss franc briefly strengthened after inflation rose in October, but failed to maintain its gains, trading at 0.8199 francs against the dollar.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
