The US dollar fell on Tuesday after a surprise interest rate hike from Australia and positive eurozone economic news but analysts warned of a possible rebound if the Federal Reserve disappoints markets at the end of its policy meeting on Wednesday.
Investors also awaited the results of US midterm elections on Tuesday and some analysts said a Republican win could be positive for the US currency on hopes for more fiscal austerity and reduced government regulation. In midday trading, the dollar index, which tracks the greenback against a basket of six currencies, was down 0.8 percent at 76.687.
The euro traded as high as $1.4052 on EBS, buoyed by a pick-up in eurozone manufacturers' output. The dollar edged up 0.3 percent to 80.75 yen, though it was still close to the record low of 79.75 yen set in 1995. The risk of Japanese intervention to weaken the yen was expected to mount if the dollar slips below 80 yen.
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