Asian FX rises as dollar slides on U.S. vote, kiwi leads gains; yuan steadies
Asian currencies mostly strengthened on Thursday as the U.S. dollar retreated after Democrats secured majorities in both chambers of Congress, easing political uncertainty and lifting global risk appetite.
The New Zealand dollar led gains, while the Chinese yuan stabilised after Beijing intervened to slow its recent appreciation.
The U.S. dollar index fell 0.3% to 101.26. The New Zealand dollar jumped 0.6% to $0.5651, while the Australian dollar rose 0.2% to $0.7015. The yen strengthened 0.3% to 157.93 per dollar and the Singapore dollar gained 0.2%, with the USD/SGD pair falling to 1.2764.
The euro rose 0.3% to $1.1260 and sterling gained 0.2% to $1.3491. The yuan recovered modestly, with the offshore USD/CNH pair down 0.1% at 6.6682 and the onshore USD/CNY pair falling 0.04% to 6.6702. The South Korean won and Taiwan dollar were exceptions, with the USD/KRW pair and USD/TWD rising 0.2%.
Dollar retreats after Democratic sweep as markets reassess Iran and Fed risks
The dollar Index rose 0.3% on Tuesday, its biggest one-day gain since October 1, taking it close to its 2026 peak reached last month.
Higher Treasury yields, stronger U.S. economic data and renewed demand for artificial-intelligence stocks supported the earlier advance. Hot inflation figures had also encouraged bets on further Federal Reserve tightening. Factory production recently grew at its fastest pace since 2021, while job openings increased by 333,000 to 7.523 million.
The subsequent Democratic sweep of the House and Senate reduced uncertainty over a potentially contested result and improved sentiment across global equities and U.S. Treasuries.
Oil remains a key variable. Prices were little changed around $103.85 a barrel after falling about 1% on Tuesday to a near four-week low. Investors are weighing diplomatic efforts to end the conflicts in Iran and Ukraine against the risk that fresh attacks could disrupt supplies.
Fed rate expectations have nevertheless remained firm: markets priced in an 81.2% chance of at least a 25-basis-point increase in December, up from 77.4% previously.
October private payrolls rose by 86,000, beating the 69,000 forecast, ahead of Friday’s government employment report.
Kiwi rebounds despite weak jobs outlook as yuan and regional data stay in focus
The kiwi rose 0.6% despite a weak domestic backdrop, remaining around 11% below its level at the end of the Covid pandemic and the Group of 10’s second-worst performer after the yen.
Third-quarter unemployment hit 5.7%, its highest since 2015, as employment fell 0.1%. The currency also touched a record low against the offshore yuan and a nearly 14-year low against the Australian dollar, raising import and living costs ahead of Saturday’s election.
The yen drew support from September Bank of Japan minutes, which showed rates at a 31-year high of 1.25%, with one policymaker signalling scope for faster increases.
Sterling held near $1.3503, a seven-week high, on track for a sixth consecutive daily gain – its longest winning run since an eight-session streak ended on July 6 – ahead of an expected Bank of England rate hike on Thursday, its first since August 2023.
Australia’s September trade surplus jumped to A$2.83 billion from A$184 million, nearly triple forecasts. The Australian dollar remained supported by the RBA’s hike to an 18-year high of 4.85%, although its divided vote fuelled expectations that the tightening cycle may be over.
The yuan ended a 13-session winning streak after the PBOC raised foreign-exchange reserve requirements to 6% from 4%, effective November 15, but remains up more than 4% this year.
Thursday’s calendar includes Indonesia’s third-quarter GDP, Taiwan and Thailand inflation, Singapore retail sales and Bank Negara Malaysia’s policy decision.
