Investing.com — Asian currencies traded mixed on Monday, with the Chinese yuan holding near its strongest level in more than four years, while the U.S. dollar remained broadly steady as investors prepared for the U.S. midterm elections and a busy week of economic data.
The U.S. dollar index rose 0.1% to 101.94, while the USD/JPY pair gained 0.2% to 157.88, leaving the yen slightly weaker. The EUR/USD pair rose 0.1% to 1.1169, still close to a 17-month low of 1.1159 touched earlier, while the GBP/USD pair was nearly unchanged at 1.3386.
The euro remained under pressure after Fitch revised France’s credit outlook to negative from stable on Friday, citing worsening debt dynamics. Sterling was also little changed at $1.3387 in earlier trading.
The offshore yuan’s USD/CNH pair was at 6.6523, while the onshore USD/CNY pair stood at 6.6540. The onshore yuan strengthened to 6.659 per dollar on Friday, its strongest level since June 6, 2022. It has gained around 5% against the dollar this year and was heading for a fourth consecutive monthly advance, supported partly by exporters converting dollar earnings into yuan.
Dollar, euro in focus as U.S. midterms and global rate decisions loom
Investors are focused on Tuesday’s U.S. midterm elections, which will determine control of Congress and influence decisions over government spending and federal borrowing. Democrats are widely expected to win the House of Representatives, while the Senate contest remains less certain.
A Democratic sweep could create obstacles for data-centre and AI infrastructure investment at the state level, while the next debate over raising the U.S. debt ceiling could become particularly contentious, analysts said. October employment data due Friday will also be important for expectations surrounding the Federal Reserve’s next policy move.
The Fed, European Central Bank, Bank of Japan and Reserve Bank of New Zealand all left interest rates unchanged last week, joining the Bank of Thailand. The BOJ’s decision followed an 8-1 vote to hold rates at 1.25%, while the RBNZ’s unexpected decision to keep its rate at 2.75% sent the New Zealand dollar down 1.2% last week.
The AUD/USD pair slipped 0.1% to $0.7024 ahead of Tuesday’s Reserve Bank of Australia decision. The RBA is widely expected to raise its cash rate to 4.85%, a near two-decade high.
