Investing.com – The dollar held near a two-week high on Tuesday as a tech-led rebound on Wall Street coaxed investors back into risk, while French fiscal jitters dragged the euro lower, and the yen surrendered more of last week’s safe-haven gains before a crowded week of central bank decisions.
The dollar index was steady at 102.11, buoyed by a revival in the artificial intelligence trade after weeks of funding worries. Anthropic made its U.S. IPO filing public on Monday, and the S&P 500 and Nasdaq rose 0.7% and 0.8%, with chipmakers leading. Asian tech stocks rallied in sympathy.
The euro was the main casualty. It last fetched $1.1171, a near two-week low and down about 1.5% in October.
A selloff in French government bonds last week drove the country’s debt-risk premium to its highest since the 2011 sovereign debt crisis, rekindling concerns about financial stress across the euro zone. France’s 10-year yield touched 5.14% last week, its highest since 2002, and recovered on Monday after Moody’s spared Paris a downgrade on Friday, but Barclays strategists said French stress is unlikely to fade before next spring’s presidential election.
“While risk appetite has shown some resilience, particularly in Europe, investors are increasingly sensitive to the possibility that interest rates may remain elevated for longer than previously anticipated,” said Daniela Hathorn, senior market analyst at Capital.com.
Central banks week
The yen weakened 0.1% to 157.66 per dollar, edging further from the one-month high it touched last week, when AI jitters sparked a haven rush. It had also lost ground on Monday. The Bank of Japan is set to hold rates at 1.25% at the end of a two-day meeting on Friday, but is expected to signal it stands ready to keep raising borrowing costs as price pressures mount. September’s hike took rates to their highest in 31 years.
The Federal Reserve, which opened a two-day meeting on Tuesday, is expected to leave rates at 3.75%-4.00% on Wednesday. Futures give less than a 10% chance of a hike this week but about 80% for December, so Chair Kevin Warsh’s press conference will be scrutinised.
The European Central Bank is also expected to hold its deposit rate at 2.5% on Thursday. The Bank of Canada and the Reserve Bank of New Zealand are expected to raise rates. Microsoft and Alphabet report earnings on Wednesday, Amazon on Thursday, and U.S. midterm elections follow on Nov. 3.
