The U.S. dollar stayed near a three-week low on Wednesday as falling Treasury yields and volatile oil prices left investors cautious. The rupee extended its rally, while attention turns to Fed, ECB and Bank of Japan decisions due next week.
The U.S. dollar held near a three-week low on Wednesday, with easing Treasury yields and volatile oil prices keeping investors cautious about the global economic outlook and the path of central bank policy.
The US Dollar Index was last up 0.1% at 101.79 by 03:03 ET (07:03 GMT). It had fallen 0.3% on Tuesday to its lowest since Oct. 1, as lower crude prices and falling Treasury yields reduced the greenback's appeal.
Yen flat, yuan steady, Aussie dollar near three-week high
The Japanese yen's USD/JPY pair traded largely flat near 158 yen amid intervention fears.
USD/CNY and USD/CNH were steady after hitting four-year lows in the previous session. Strong economic data and a firm daily fixing by the People's Bank of China supported the yuan, and China's economy expanded 4.5% year-on-year in the third quarter, beating expectations.
The Australian dollar's AUD/USD pair rose 0.2% to $0.702, hovering near a three-week high. Reserve Bank of Australia Deputy Governor Andrew Hauser said uncertainty remained over the need for further interest-rate increases as inflation risks worsened. The comments reinforced expectations that the RBA could maintain a restrictive policy stance for longer.
Rupee extends rally as oil stays a risk
The Indian rupee was a standout performer, extending its winning streak as Reserve Bank of India measures to curb dollar demand and expected inflows linked to the Jio Platforms initial public offering supported the currency. The USD/INR pair edged down 0.1% to 94.68 rupees, falling for a ninth straight session and hitting its lowest since early September.
However, rising oil prices remain a key vulnerability for the rupee, given India's reliance on imported energy. Brent crude rose 1.5% to above $110 a barrel in early trade on Wednesday, reflecting persistent Middle East supply concerns.
Fed, ECB and BoJ meet October 28 to 30
The U.S. Federal Reserve, European Central Bank and Bank of Japan are all due to announce policy decisions between October 28 and 30. The Fed is widely expected to hold interest rates at 3.75%-4.00% on October 28, although markets expect policymakers to resume tightening in December.
Meanwhile, the BOJ is widely expected to keep its policy rate at 1.25% after raising it to a 31-year high in September. Investors will scrutinise its updated inflation forecasts and Governor Kazuo Ueda's guidance for clues on the timing of its next increase, potentially in December.
Source: Investing.com
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