The dollar jumped ahead of US Midterm elections. Greenback’s gains were limited as traders were cautious about the US midterm elections and any fallout for the world’s largest economy.
The greenback has outperformed most major currencies this year, benefiting from the robust U.S. economy and rising interest rates.
Investors focus on whether congressional elections could disrupt the rally of the world’s most liquid currency.
Analysts expect that the elections will help the Democratic Party to win control of the U.S. House of Representatives. Republicans are likely to retain their majority in the Senate.
Forex experts believe a divided Congress will see the dollar dip. In turn, that would boost emerging market currencies hindered this year by higher U.S. rates.
Forex – Commodities – US Midterm Elections – Dollar jumps
The dollar inched up 0.2% against its major traded rivals at 96.446. Last week, it had hit a 16-month high of 97.20.
The euro was slightly lower at $1.1392, about 1% above this year’s trough of $1.1301 touched on Aug. 15.
Euro zone finance ministers called on Italy overnight to change its 2019 budget to conform with European Union rules. However, Rome maintained its position saying its disputed deficit plan would not change.
Sterling dipped after a senior member of the Northern Irish DUP party said on Tuesday a no-deal Brexit is likely to happen. Further, the pound fell to a 5-month low versus the euro of 87.19 pence, down 0.2% on the day after such comments.
With less than five months before Britain leaves the EU, investors are growing anxious. In addition, the sterling is moving sharply on any news of a possible breakthrough.
The Australian dollar traded flat despite Reserve Bank of Australia’s widely anticipated decision to keep interest rates steady. The Aussie later rose 0.3%to $0.7240. It is trading around 2.7 percent above a more than 2-1/2-year low of $0.7018 touched on Oct. 26.
Sources: Reuters, CNN money, BBC
PLEASE NOTE The information above is not investment advice.