Dollar drifts on Mideast, midterm risks; Aussie dips after expected RBA hike
SPY•The dollar traded slightly weaker as markets weighed US-Iran tensions and midterm election risks, while the Australian dollar fell after the Reserve Bank of Australia raised rates by 25 basis points to 4.85%, as expected.
1. Dollar and risk sentiment
The dollar index traded 0.1% lower at 101.72 on Tuesday after falling to a one-month low on Monday. US strikes on Iran's Qeshm Island weighed on optimism about peace talks, while US midterm election risks and an AI-driven stock market slump affected risk sentiment.
2. Currencies and rate moves
The euro rose 0.1% to $1.1195, while the yen was little changed at 157.81 per dollar. China's offshore yuan fell 0.36% to 6.671 per dollar after the People's Bank of China said it would raise the foreign exchange reserve requirement ratio. The Reserve Bank of Australia raised its cash rate by 25 basis points to 4.85%; the Australian dollar fell as much as 0.35% to $0.6973 after the decision.
