The U.S. dollar found stability on Wednesday, holding steady near last week’s close after a day of mixed performance. Meanwhile, the Australian dollar saw an uptick in response to stronger-than-expected inflation data, which raised expectations of possible interest rate hikes.
The dollar index, which measures the U.S. dollar against a basket of six major currencies, held at 106.3. This followed a 0.55% decline on Monday, partly due to a pause in the recent surge in U.S. yields. However, it rebounded by 0.62% on Tuesday after the release of positive economic data, including the S&P Global’s flash U.S. Composite Purchasing Managers Index, which reached its highest level since July. This data potentially gives the U.S. Federal Reserve more room to maintain high-interest rates.
The Australian dollar made the most notable move of the day, surging as much as 0.7% to a two-week high of $0.6400. This gain was driven by data showing that Australia’s consumer price index rose by 1.2% in the third quarter, surpassing market expectations for a 1.1% increase and up from the previous quarter’s 0.8% rise. This data has led traders to narrow down the odds of a possible interest rate increase by the Reserve Bank of Australia (RBA) next month, following four consecutive rate pauses.
The Japanese yen remained close to the 150 threshold against the U.S. dollar, with the Japanese currency trading at 149.9 per dollar. This situation keeps traders vigilant for any signs of intervention by Japanese authorities, as pressure mounts on the Bank of Japan to potentially adjust its bond yield control.
In the cryptocurrency market, Bitcoin was slightly down at $33,863, maintaining its position near an 18-month high reached on Tuesday. The recent surge in Bitcoin’s price is fueled by speculation that an exchange-traded bitcoin fund may be on the horizon.
As for the broader forex market, the euro and the pound remained flat on the day, with the euro at $1.0596 and the pound at $1.2163. Both currencies were initially affected by the dollar’s recent swings.
Market participants are also closely monitoring the Japanese yen’s performance and whether Japanese authorities might intervene in the currency market to support the yen, as global interest rates rise.