Edition · Tue 03 Nov 2026
Forex Desk
The Dollar Drifts, the Aussie Dips After a Near 18-Year-High Rate Hike, and the Yuan Slides
The dollar index traded at 101.72 near a one-month low, the Australian dollar slipped after an RBA rate hike, and China's offshore yuan tumbled following a reserve-ratio shift.
Not investment advice: this article is for information only.
By Rachel · Edited by Chanan Zevin - Chief Editor and Head of Desks
Published
RBA delivers near 18-year high but split vote weighs on the Aussie
The U.S. dollar eased on Tuesday, Nov. 3, as currency traders assessed geopolitical friction in the Middle East and domestic political risks ahead of U.S. midterm elections, while policy actions drove declines in Australia and China. The dollar index traded slightly weaker at 101.72 after dropping to a one-month low a day earlier.
RBA delivers near 18-year high but split vote weighs on the Aussie
Why it matters: Shifts across foreign exchange benchmarks determine the purchasing power of international travelers, the corporate earnings of multinational businesses, and the everyday costs of imported goods. When central banks alter lending benchmarks or reserve rules, the resulting currency swings swiftly filter through to household borrowing rates, overseas commodity purchases, and investment portfolios worldwide.
RBA delivers near 18-year high but split vote weighs on the Aussie
In Sydney, the Reserve Bank of Australia raised its official cash rate by 25 basis points to 4.85% on Tuesday, marking its highest borrowing benchmark since December 2008. The move represented the Australian central bank's fifth increase of the year, bringing cumulative tightening to 125 basis points. However, the Australian dollar fell 0.5% to $0.6963, after reaching an intraday low of $0.6973.
RBA delivers near 18-year high but split vote weighs on the Aussie
Market participants retreated from the Australian currency after a narrower-than-anticipated 6-3 vote revealed emerging dissension among policymakers. Matt Simpson, senior markets analyst at StoneX, said that the rate hike was already priced in and that appetite for additional tightening had waned with three dissenters. Analysts at Westpac noted, that the board also removed language stating the bank was willing to increase the cash rate further if necessary, pointing toward a more measured approach.
Beijing tightens foreign exchange reserves as offshore yuan drops
In China, the offshore yuan dropped 0.36% to 6.671 per dollar, recording its sharpest single-day decline since May. The dollar climbed 0.37% against both the onshore and offshore yuan to 6.672 after the People's Bank of China acted to cool recent currency gains.
Beijing tightens foreign exchange reserves as offshore yuan drops
The Chinese central bank mandated an increase in the foreign exchange reserve requirement ratio, compelling financial institutions to hold more foreign currency in reserve. Analysts and traders viewed the policy shift as a deliberate step to tighten dollar liquidity and slow the speed of the currency's advance.
Midterm election uncertainty and Middle East tensions stall the greenback
The greenback faced broader headwinds as investors navigated the impending U.S. midterm elections and ongoing friction between Washington and Tehran. Kit Juckes, head of foreign exchange strategy at Societe Generale, said that the risk of legislative gridlock could complicate fiscal policy, cautioning that spending disputes amid sizable budget deficits could ultimately slow the economy and weaken the currency.
Midterm election uncertainty and Middle East tensions stall the greenback
Geopolitical developments also shaped trading sentiment. A senior Iranian official told Reuters on Tuesday that Tehran and Washington remained far from reaching an agreement to conclude their eight-month conflict, following U.S. strikes on Iran's Qeshm Island. While Brent crude futures rose 0.5% to $105.25 per barrel after plunging more than 7% on Monday, an ongoing equity slump driven by artificial intelligence concerns lent residual support to the dollar.
European currencies edge higher ahead of central bank decisions
In Europe, the euro rose 0.14% to $1.1201, while The common currency 0.1% stronger at $1.1195. Sterling edged up 0.1% to $1.3421, while Devdiscourse quoted the British pound at $1.3417 following factory data showing the strongest output growth in more than two years at the start of the final quarter of 2026.
European currencies edge higher ahead of central bank decisions
The Bank of England, alongside central banks in Norway and Sweden, is scheduled to issue policy decisions this week. Economists surveyed by Reuters expect the Bank of England to lift its bank rate to 4.0% from 3.75%, which Devdiscourse noted would mark its first rate increase since August 2023, when inflation exceeded triple the 2% target. Elsewhere, the Swiss franc strengthened after October annual inflation reached its highest mark in nearly three years, pushing the euro down 0.2% to 0.9137 francs and sending the dollar down 0.3% to 0.8164 francs.
European currencies edge higher ahead of central bank decisions
In Asian trading, the Japanese yen fetched 157.81 per dollar during a domestic holiday, after The currency fractionally stronger at 157.8 per dollar, while the New Zealand dollar traded flat at $0.5616.