The Dollar Regains Ground

The dollar held steady during Asia trade on Tuesday, as some of the enthusiasm from bets on China’s reopening faded and traders focused on the U.S. midterm elections.

The yuan has retained most of its gains lately but has given back a little bit to trade at 7.2432 per dollar on Tuesday as additional COVID-19 outbreaks have undermined some optimism.

The growth-sensitive Australian and New Zealand dollars fell nearly 0.514%. This left the Aussie at $0.64429 and the Kiwi at $0.59116 after earlier reaching a seven-week high of $0.5951.

The market’s attention is shifting to the United States midterm elections later in the day. Spectators expect republican triumph and consequent deadlock in Congress. A definitive answer might take days. Suppose fiscal stimulus is reduced. In that case, the impact might be favorable for bonds but negative for the dollar. The euro was on the verge of falling again below parity and was the last trading at $1.

Sterling rose on Monday. It was 0.2% down at $1.1490, with the focus on the financial statement due on November 17. China’s tight virus policy includes lockdowns, quarantining, and stringent testing and officials stressed over the weekend that the procedures are “absolutely correct” and will remain in place.

Bitcoin lost 5% to $19,600, while ether sank dramatically. The yen in Japan reached a one-week high of 146.35 per dollar. In October, Japan’s foreign currency reserves fell by the most in a month, as the government spent 6.35T yen intervening to maintain the yen. In a summary of comments at the Bank of Japan’s October policy meeting on Tuesday, policymakers discussed the spillover effects of extended monetary easing and the need to limit the potential impact of a further retreat from ultra-low interest rates.